August 19, 2009
RE: UFA credit turned over to Scotia Bank, Terms and Conditions Unacceptable
Dear readers/Albertans,
I am writing to warn you about what I find very suspicious behaviour by Scotia Bank on behalf of UFA, as they are taking over the "lines of credit" offered by the United Farmers of Alberta.
This means all UFA account holders will be required to sign a new credit agreement; all you have to do is agree to the terms and conditions (T&C) offered by Scotia Bank, “it’s simple”.
Well it’s not SIMPLE. Firstly, you should know that we will be cancelling our account with UFA over this situation.
Now, onto the details:
The terms and conditions are listed in a brochure included with the legal length document that Scotia Bank/UFA wants us to sign and return by the end of this month (August). This is very short notice, and there is a reason for this – they don’t want you to read the “Terms and Conditions” set out by Scotia Bank.
The legal document states that our loan is "unsecured". This is NOT true, however, as Section 18 of their T&C states:
"Section 18 Proceeds of Sales. You shall be entitled to sell any seed, grain, crops or livestock in the ordinary course of business upon customary sale terms for value received provided however that any and all Proceeds of any such sale shall be received by you as trustee for the Bank and shall be forthwith paid over to UFA, as agent and in trust for the Bank, or directly to the Bank, in each case, in order to repay to us all indebtedness and liabilities owing by you and in respect of the Credit and the Agreement."
What this means is they have a "security interest" in your "seed, grain, crops or livestock"... and accordingly, as I see it, you will have to list UFA/Scotia Bank in Part F of the Livestock Manifest as a "Livestock Security Interest Holder". They will, if they choose, have first dibs (before you) on any proceeds from the sales of these assets.
This means your credit agreement with UFA IS "secured".
Further, to this backdoor collateral agreement for your property, Scotia Banks Terms and Conditions state the following. Please bear with me, there are some long paragraphs, but they are extremely important for you to understand:
"Section 13. Application of Security Provision. The Credit shall be unsecured and the following Sections 14 through 16, inclusive, will not be applicable. Notwithstanding the first sentence of Section 13, the Credit shall be secured and Sections 14 through 16, inclusive, shall be applicable and become operative: (i) in those circumstances where the Borrower has provided a separate written confirmation as to the applicability of such Sections effective as at the date of such written confirmation being provided to us; or (ii) upon the occurrence of any of those events as listed in the first sentence of Section 25 heretor which would entitle us to terminate the Credit effective as at the date of the first occurrence (and without any further notice from us).
Section 14. Security. As general and continuing collateral security for payment of all existing and future indebtedness and liability owing by you to the Bank wheresoever and however incurred and any ultimate unpaid balances thereof, you hereby irrevocably and unconditionally grant to the Bank: (a) a security interest in, and a mortgage, charge, transfer and absolute assignment of, all of your present and after-acquired personal property and real property, and all personal property in which you now or hereafter have rights, of whatever nature and kind, and wheresoever situated, and in all proceeds of any type or kind whatsoever derived directly or indirectly from any dealing with the said property or proceeds therefrom, including without limitation, all insurance proceeds and all payments, rights and entitlements as indemnity or compensation of any kind for loss or damage to such collateral (collective, "Proceeds"), (b) a purchase-money security interest in all present and after-acquired personal property for which the Bank has given value for the purpose of enabling you to acquire rights in or to such personal property to the extent that the value is applied to acquire such rights, and in all Proceeds derived or arising therefrom, (c) a mortgage and charge as and by way of a fixed and specific charge, and an assignment and transfer of, and a special security interest in, all your present and after acquired crops grown during the Agreement and in all Proceeds derived or arising therefrom and in all your presently owned or held and after-acquired or held property which is, or in the future becomes, a fixture or constitutes a licence, quota, permit or other similar right or benefit and in all Proceeds derived or arising therefrom, and (d) a charge, as and by way of floating charge, of all of your property, assets and undertaking of every nature and kind, real and personal, tangible and intangible, present and after-acquired, legal and equitable, wherever the same may be situate, that have not been validly and effectively charged by the fixed and specific charges under subsections (a), (b), and (c) created hereby. You and the Bank do not intend to postpone the attachment of the security interests except the security interests will attach when: (i) the Agreement has been executed, or in the case of after-acquired property, that property has been acquired by you, (ii) value has been given, and (iii) you have rights in the collateral, or in the case of after-acquired property, acquire rights in the collateral. The floating charge created by the Agreement shall be crystallized and become a fixed charge upon the earliest of: (i) any one of the events described in Section 25 hereof occurring; (ii) a demand for payment being made by the Bank; or (iii) the Bank taking any action to appoint a receiver or to enforce its security interest or to realize upon all or any part of the collateral.
Section 15. Registration. Financing statements perfecting any security interest in, or mortgage and charges of, any real and personal property and crops and notices in respect thereof granted by you pursuant to the preceding section or in any other manner may be registered by the Bank or its counsel or agents in all appropriate registries at the sole discretion of the Bank. You acknowledge receipt of the Agreement and, to the extent permitted by law, you hereby waive any right to receive a copy of any financing statement, verification statement or similar statement registered or to be registered by the Bank at any time regarding any security interests, mortgages and charges granted and any extension, amendment or continuation thereof.
Section 16. Further Security. You may be required to provide, and hereby agree to provide, additional or other security or documentation to us such as: (a) a mortgage or leasehold interest in respect of real property, (b) a personal quarantee and/or a postponement of other debts from a third party or third parties, (c) an annual security agreement granting us a security interest in all crops, or (d) any other security agreement in respect of other real or personal property in which you have an interest; and, in each case, in any Proceeds derived or arising therefrom. If the Credit is secured by a mortgage on real property, you will not further encumber the property without our permission. If you sell the real or personal property which is subject to a mortgage or a security interest under a security agreement, you agree that you will immediately repay to us all indebtedness and liabilities owing by you under and in respect of the Credit and the Agreement.
Section 17. Land Titles Act. You hereby consent to the Bank conducting a name search in respect of the Borrower pursuant to the applicable Land Titles Act, or Land Title Act, or land titles or real property legislation of the applicable jurisdiction.
Section 18. Proceeds of Sale. You shall be entitled to sell any seed, grain, crops or livestock in the ordinary course of business upon customary sale terms for value received provided however that any and all Proceeds of any such sale shall be received by you as trustee for the Bank and shall be forthwith paid over to UFA, as agent and in trust for the Bank, or directly to the Bank; in each case, in order to repay to us all indebtedness and liabilities owing by you under and in respect of the Credit and the Agreement."
moving to Section 25,
“Section 25. Rights and Remedies of the Bank. We may terminate the Credit without prior notice and require you to immediately pay to us in full your indebtedness and liabilities in respect of the Credit and the Agreement if: (a) you do not carry out your obligations under the Agreement, (b) you fail to make any payment when it is due, (c) you become bankrupt, insolvent, or die, or (d) security you have pledged reduces in value to a level that we consider unacceptable.” {Note that this is the “first sentence in Section 25, referred back in Sections 13} “Upon determination that your creditworthiness has changed adversely or does not satisfy our credit standards, the Bank may terminate the Credit or reduce the Credit Limit or enforce payment of the indebtedness and liabilities owing by you to the Bank in respect of the Credit and the Agreement and the performance of your obligations under the Agreement. You agree that if there is a breach of any of your obligations under the Agreement, or if we terminate the Credit, or if we believe in good faith that the prospect of payment of any indebtedness or liabilities is impaired, the Bank shall as additional rights and remedies all the rights and remedies of a secured creditor under the Personal Property Security Act of the Province in which the Agreement is or may be enforced against you including; (i) bringing action and obtaining judgement on the underlying indebtedness and liabilities before proceeding against the collateral over which the Bank has security, (ii) enforcing our security interest in such collateral by any method available in or permitted by law, before or after obtaining judgment, and (iii) disposing of such collateral upon such terms and conditions as the Bank shall determine. The Bank may exercise any of its rights and remedies without affecting any other rights and remedies. In addition, the Bank shall have the right to appoint, by instrument in writing, or otherwise, a receiver (which term shall include receiver and manager) over the collateral over which the Bank has security and any such receiver shall have the power to take possession of the collateral for the purpose of the preservation, protection or realization of the collateral and sell or otherwise dispose of all or any part of the collateral at public auction, by public tender or by private sale and either for cash or credit at such time and upon such terms and conditions as the receiver shall determine, provided that any such receiver shall be your agent and not our agent. If the proceeds of the realization of the collateral are insufficient to fully pay your indebtedness and liabilities owing in respect of the Credit and the Agreement, you will be liable to pay, and will immediately pay or cause to be paid, the deficiency to the Bank. You agree that you will, on demand, pay us our costs, including all legal costs on a solicitor client basis, for any action taken to collect the amounts due to protect or realize on security which you have given. These charges may be added to your Credit and treated as and advance thereunder.”
Where do I start with my own interpretation of this Credit Agreement?
In a nut shell, if you sign this UFA/Scotia Bank Credit Agreement under Scotia Banks new terms and conditions set forth in their brochure, you are signing away all your personal assets (now and forthcoming in the future) to “the Bank” (granting a personal guarantee). “The Bank”, for now, is the Scotia Bank, but their interest here can be sold or transferred.
All unsecured credit agreements are in actuality secured agreements visa Section 18 which states you, the Borrower, will collect the Proceeds of sales of seed, grain, crops or livestock…. AS TRUSTEE FOR THE BANK.
In the case of livestock, the new manifest has a Part F which states you must declare who has a “Livestock Security Interest” in the animals you are selling…. I believe that this must then include Scotia Bank if you have a UFA/Scotia Bank credit agreement.
The first sentence of Section 25 is very important, and it cannot be over-stressed that “the Bank” takes collateral/security in all your personal assets under the conditions of this “first sentence”. For example, if the credit “Borrower” dies, the Credit Agreement automatically becomes “secured” by the deceased Borrower's personal property.
“The Bank” will also take your personal property as security if they consider your property or assets have REDUCED IN VALUE TO AN "UNACCEPTABLE" LEVEL.
So what happens if your farm is thrown into a control, surveillance or quarantined animal health zone as described by the new Alberta Animal Health Act? What value will your farm assets have when you can’t sell them? At the discretion of “the Bank”, they can call your credit line in and demand full payment. How will you make that payment when you can’t sell your livestock?
The Terms and Conditions of this Scotia Bank Credit Agreement on behalf of UFA are unacceptable to me. They may very well be unacceptable to many out there, whether you have a UFA line of credit or not. The point which I am making, in short, is:
---- read the terms and conditions of the Brochure carefully before you sign on for the UFA/Scotia Bank “credit agreement”. My advice – don’t sign it if you have other more user-friendly credit lines. Just because it says it is “unsecured” at the top of the document, does not mean this is FACT. Facts and circumstances change, and under “this agreement” you are caught in a “financial trap” which will eventually result in them holding your assets as collateral/security.
This is an over-the-top property grab to backstop the credit granted by the United Farmers of Alberta by the new loan collector “Scotia Bank”.
It is a sign to many that UFA must have been deeply in trouble with their outstanding debts, and has now transferred that “liability” to Scotia Bank.
Scotia Bank has taken on this credit liability with full knowledge that they can claw back real property and assets which will inevitably create new wealth for their private banking corporation.
UFA, in my opinion, no longer stands for United Farmers of Alberta.
These are my initial reactions for the time being. I want this information to get out quickly to Albertans before they automatically sign their new Scotia Bank/UFA credit agreements. You must make an informed decision here, and that will take time. You must carefully read and understand the Scotia Bank’s “Terms and Conditions”.
Sincerely,
Kathy Czar
Hanna, AB
lkczar@hotmail.com
RE: UFA credit turned over to Scotia Bank, Terms and Conditions Unacceptable
Dear readers/Albertans,
I am writing to warn you about what I find very suspicious behaviour by Scotia Bank on behalf of UFA, as they are taking over the "lines of credit" offered by the United Farmers of Alberta.
This means all UFA account holders will be required to sign a new credit agreement; all you have to do is agree to the terms and conditions (T&C) offered by Scotia Bank, “it’s simple”.
Well it’s not SIMPLE. Firstly, you should know that we will be cancelling our account with UFA over this situation.
Now, onto the details:
The terms and conditions are listed in a brochure included with the legal length document that Scotia Bank/UFA wants us to sign and return by the end of this month (August). This is very short notice, and there is a reason for this – they don’t want you to read the “Terms and Conditions” set out by Scotia Bank.
The legal document states that our loan is "unsecured". This is NOT true, however, as Section 18 of their T&C states:
"Section 18 Proceeds of Sales. You shall be entitled to sell any seed, grain, crops or livestock in the ordinary course of business upon customary sale terms for value received provided however that any and all Proceeds of any such sale shall be received by you as trustee for the Bank and shall be forthwith paid over to UFA, as agent and in trust for the Bank, or directly to the Bank, in each case, in order to repay to us all indebtedness and liabilities owing by you and in respect of the Credit and the Agreement."
What this means is they have a "security interest" in your "seed, grain, crops or livestock"... and accordingly, as I see it, you will have to list UFA/Scotia Bank in Part F of the Livestock Manifest as a "Livestock Security Interest Holder". They will, if they choose, have first dibs (before you) on any proceeds from the sales of these assets.
This means your credit agreement with UFA IS "secured".
Further, to this backdoor collateral agreement for your property, Scotia Banks Terms and Conditions state the following. Please bear with me, there are some long paragraphs, but they are extremely important for you to understand:
"Section 13. Application of Security Provision. The Credit shall be unsecured and the following Sections 14 through 16, inclusive, will not be applicable. Notwithstanding the first sentence of Section 13, the Credit shall be secured and Sections 14 through 16, inclusive, shall be applicable and become operative: (i) in those circumstances where the Borrower has provided a separate written confirmation as to the applicability of such Sections effective as at the date of such written confirmation being provided to us; or (ii) upon the occurrence of any of those events as listed in the first sentence of Section 25 heretor which would entitle us to terminate the Credit effective as at the date of the first occurrence (and without any further notice from us).
Section 14. Security. As general and continuing collateral security for payment of all existing and future indebtedness and liability owing by you to the Bank wheresoever and however incurred and any ultimate unpaid balances thereof, you hereby irrevocably and unconditionally grant to the Bank: (a) a security interest in, and a mortgage, charge, transfer and absolute assignment of, all of your present and after-acquired personal property and real property, and all personal property in which you now or hereafter have rights, of whatever nature and kind, and wheresoever situated, and in all proceeds of any type or kind whatsoever derived directly or indirectly from any dealing with the said property or proceeds therefrom, including without limitation, all insurance proceeds and all payments, rights and entitlements as indemnity or compensation of any kind for loss or damage to such collateral (collective, "Proceeds"), (b) a purchase-money security interest in all present and after-acquired personal property for which the Bank has given value for the purpose of enabling you to acquire rights in or to such personal property to the extent that the value is applied to acquire such rights, and in all Proceeds derived or arising therefrom, (c) a mortgage and charge as and by way of a fixed and specific charge, and an assignment and transfer of, and a special security interest in, all your present and after acquired crops grown during the Agreement and in all Proceeds derived or arising therefrom and in all your presently owned or held and after-acquired or held property which is, or in the future becomes, a fixture or constitutes a licence, quota, permit or other similar right or benefit and in all Proceeds derived or arising therefrom, and (d) a charge, as and by way of floating charge, of all of your property, assets and undertaking of every nature and kind, real and personal, tangible and intangible, present and after-acquired, legal and equitable, wherever the same may be situate, that have not been validly and effectively charged by the fixed and specific charges under subsections (a), (b), and (c) created hereby. You and the Bank do not intend to postpone the attachment of the security interests except the security interests will attach when: (i) the Agreement has been executed, or in the case of after-acquired property, that property has been acquired by you, (ii) value has been given, and (iii) you have rights in the collateral, or in the case of after-acquired property, acquire rights in the collateral. The floating charge created by the Agreement shall be crystallized and become a fixed charge upon the earliest of: (i) any one of the events described in Section 25 hereof occurring; (ii) a demand for payment being made by the Bank; or (iii) the Bank taking any action to appoint a receiver or to enforce its security interest or to realize upon all or any part of the collateral.
Section 15. Registration. Financing statements perfecting any security interest in, or mortgage and charges of, any real and personal property and crops and notices in respect thereof granted by you pursuant to the preceding section or in any other manner may be registered by the Bank or its counsel or agents in all appropriate registries at the sole discretion of the Bank. You acknowledge receipt of the Agreement and, to the extent permitted by law, you hereby waive any right to receive a copy of any financing statement, verification statement or similar statement registered or to be registered by the Bank at any time regarding any security interests, mortgages and charges granted and any extension, amendment or continuation thereof.
Section 16. Further Security. You may be required to provide, and hereby agree to provide, additional or other security or documentation to us such as: (a) a mortgage or leasehold interest in respect of real property, (b) a personal quarantee and/or a postponement of other debts from a third party or third parties, (c) an annual security agreement granting us a security interest in all crops, or (d) any other security agreement in respect of other real or personal property in which you have an interest; and, in each case, in any Proceeds derived or arising therefrom. If the Credit is secured by a mortgage on real property, you will not further encumber the property without our permission. If you sell the real or personal property which is subject to a mortgage or a security interest under a security agreement, you agree that you will immediately repay to us all indebtedness and liabilities owing by you under and in respect of the Credit and the Agreement.
Section 17. Land Titles Act. You hereby consent to the Bank conducting a name search in respect of the Borrower pursuant to the applicable Land Titles Act, or Land Title Act, or land titles or real property legislation of the applicable jurisdiction.
Section 18. Proceeds of Sale. You shall be entitled to sell any seed, grain, crops or livestock in the ordinary course of business upon customary sale terms for value received provided however that any and all Proceeds of any such sale shall be received by you as trustee for the Bank and shall be forthwith paid over to UFA, as agent and in trust for the Bank, or directly to the Bank; in each case, in order to repay to us all indebtedness and liabilities owing by you under and in respect of the Credit and the Agreement."
moving to Section 25,
“Section 25. Rights and Remedies of the Bank. We may terminate the Credit without prior notice and require you to immediately pay to us in full your indebtedness and liabilities in respect of the Credit and the Agreement if: (a) you do not carry out your obligations under the Agreement, (b) you fail to make any payment when it is due, (c) you become bankrupt, insolvent, or die, or (d) security you have pledged reduces in value to a level that we consider unacceptable.” {Note that this is the “first sentence in Section 25, referred back in Sections 13} “Upon determination that your creditworthiness has changed adversely or does not satisfy our credit standards, the Bank may terminate the Credit or reduce the Credit Limit or enforce payment of the indebtedness and liabilities owing by you to the Bank in respect of the Credit and the Agreement and the performance of your obligations under the Agreement. You agree that if there is a breach of any of your obligations under the Agreement, or if we terminate the Credit, or if we believe in good faith that the prospect of payment of any indebtedness or liabilities is impaired, the Bank shall as additional rights and remedies all the rights and remedies of a secured creditor under the Personal Property Security Act of the Province in which the Agreement is or may be enforced against you including; (i) bringing action and obtaining judgement on the underlying indebtedness and liabilities before proceeding against the collateral over which the Bank has security, (ii) enforcing our security interest in such collateral by any method available in or permitted by law, before or after obtaining judgment, and (iii) disposing of such collateral upon such terms and conditions as the Bank shall determine. The Bank may exercise any of its rights and remedies without affecting any other rights and remedies. In addition, the Bank shall have the right to appoint, by instrument in writing, or otherwise, a receiver (which term shall include receiver and manager) over the collateral over which the Bank has security and any such receiver shall have the power to take possession of the collateral for the purpose of the preservation, protection or realization of the collateral and sell or otherwise dispose of all or any part of the collateral at public auction, by public tender or by private sale and either for cash or credit at such time and upon such terms and conditions as the receiver shall determine, provided that any such receiver shall be your agent and not our agent. If the proceeds of the realization of the collateral are insufficient to fully pay your indebtedness and liabilities owing in respect of the Credit and the Agreement, you will be liable to pay, and will immediately pay or cause to be paid, the deficiency to the Bank. You agree that you will, on demand, pay us our costs, including all legal costs on a solicitor client basis, for any action taken to collect the amounts due to protect or realize on security which you have given. These charges may be added to your Credit and treated as and advance thereunder.”
Where do I start with my own interpretation of this Credit Agreement?
In a nut shell, if you sign this UFA/Scotia Bank Credit Agreement under Scotia Banks new terms and conditions set forth in their brochure, you are signing away all your personal assets (now and forthcoming in the future) to “the Bank” (granting a personal guarantee). “The Bank”, for now, is the Scotia Bank, but their interest here can be sold or transferred.
All unsecured credit agreements are in actuality secured agreements visa Section 18 which states you, the Borrower, will collect the Proceeds of sales of seed, grain, crops or livestock…. AS TRUSTEE FOR THE BANK.
In the case of livestock, the new manifest has a Part F which states you must declare who has a “Livestock Security Interest” in the animals you are selling…. I believe that this must then include Scotia Bank if you have a UFA/Scotia Bank credit agreement.
The first sentence of Section 25 is very important, and it cannot be over-stressed that “the Bank” takes collateral/security in all your personal assets under the conditions of this “first sentence”. For example, if the credit “Borrower” dies, the Credit Agreement automatically becomes “secured” by the deceased Borrower's personal property.
“The Bank” will also take your personal property as security if they consider your property or assets have REDUCED IN VALUE TO AN "UNACCEPTABLE" LEVEL.
So what happens if your farm is thrown into a control, surveillance or quarantined animal health zone as described by the new Alberta Animal Health Act? What value will your farm assets have when you can’t sell them? At the discretion of “the Bank”, they can call your credit line in and demand full payment. How will you make that payment when you can’t sell your livestock?
The Terms and Conditions of this Scotia Bank Credit Agreement on behalf of UFA are unacceptable to me. They may very well be unacceptable to many out there, whether you have a UFA line of credit or not. The point which I am making, in short, is:
---- read the terms and conditions of the Brochure carefully before you sign on for the UFA/Scotia Bank “credit agreement”. My advice – don’t sign it if you have other more user-friendly credit lines. Just because it says it is “unsecured” at the top of the document, does not mean this is FACT. Facts and circumstances change, and under “this agreement” you are caught in a “financial trap” which will eventually result in them holding your assets as collateral/security.
This is an over-the-top property grab to backstop the credit granted by the United Farmers of Alberta by the new loan collector “Scotia Bank”.
It is a sign to many that UFA must have been deeply in trouble with their outstanding debts, and has now transferred that “liability” to Scotia Bank.
Scotia Bank has taken on this credit liability with full knowledge that they can claw back real property and assets which will inevitably create new wealth for their private banking corporation.
UFA, in my opinion, no longer stands for United Farmers of Alberta.
These are my initial reactions for the time being. I want this information to get out quickly to Albertans before they automatically sign their new Scotia Bank/UFA credit agreements. You must make an informed decision here, and that will take time. You must carefully read and understand the Scotia Bank’s “Terms and Conditions”.
Sincerely,
Kathy Czar
Hanna, AB
lkczar@hotmail.com
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