180 Recognition Of Trust Estates

PRACTICE

Registration of Title

Personal Representative’s Title: Section 180(2)

If an application for registration of a transmission of an estate does not indicate the specific capacity of the personal representative (i.e., executor or administrator), the registrar shows the full title of the personal representative as follows:

A.B., ADDRESS, PERSONAL REPRESENTATIVE OF THE ESTATE OF C.D., DECEASED, (DOC#).

If the application specifies a specific capacity of executor or administrator and the capacity aligns with the supporting document, the registrar shows the full title of a personal representative, either “executor” or “administrator”, on an indefeasible title as follows:

Executor:

A.B., ADDRESS, EXECUTOR OF THE WILL OF C.D., DECEASED, (doc#).

Administrator:

A.B., ADDRESS, ADMINISTRATOR OF THE ESTATE OF C.D., DECEASED, (doc#).

Administrator under Power of Attorney:

A.B., ADDRESS, ADMINISTRATOR UNDER POWER OF ATTORNEY OF THE ESTATE OF C.D., (doc#).

Administrator with Will Annexed:

A.B., ADDRESS, ADMINISTRATOR WITH WILL ANNEXED OF ESTATE OF C.D., DECEASED, (doc#).

Executor where Sole Executor or Surviving Executor Dies Testate:

A.B., ADDRESS, EXECUTOR OF THE WILL OF C.D., DECEASED, (doc#), THE EXECUTOR OF THE WILL OF E.F., DECEASED, (doc#).

Administrator where Sole Executor or Surviving Executor Dies Intestate:

A.B., ADDRESS, ADMINISTRATOR WITH WILL ANNEXED “DE BONIS NON” OF ESTATE OF C.D., DECEASED. SEE (doc#) AND (doc#).

Administrator where Original Administrator Dies:

A.B., (ADDRESS), ADMINISTRATOR “DE BONIS NON” OF ESTATE C.D., DECEASED. SEE (doc#) AND (doc#).

Trustee’s Title: Section 180(3) or (9)

When a trustee acquires property, the registrar registers the property in the trustee’s name in the following manner:

A.B., ADDRESS, “IN TRUST” (doc#).

When an application is made to register a trust against property already registered in the trustee’s name in accordance with s. 180(9), the registrar amends the title to the property.

Other Examples

See chapter 64 (Trustees, Personal Representatives, and Trustees in Bankruptcy) for other examples of the registration of titles in the name of trustees under the Bankruptcy and Insolvency Act, Trustee (Church Property) Act, or United Church of Canada Act.

Registration of Trust Instruments

Filing Instruments Creating or Declaring a Trust: Section 180(4)

To register an instrument in which a trustee acquires an estate or interest in trust, the trustee must produce the original instrument creating the trust, or it must already be on file at the land title office at the time of application.

Although s. 180(4) requires that the original trust instrument be filed with the registrar, the operation of s. 38(6) of the Act enables the registrar to make a copy and return the original to the applicant at the time of filing. Section 180(5) creates an exception to the requirement to produce and file an original, but the exception is narrowly defined.

Submissions

On the Declaration form, enter a description of the trust instrument and attach an image of the original trust instrument. The electronic Declaration is submitted in support of the instrument that creates the interest in land.

Examination of Documents Submitted by Trustee

Before registering a trustee’s title, the registrar examines the documents submitted to determine that:

1. the trust instrument is properly executed (it is usually witnessed but need not comply with Part 5);
2. there is a trustee;
3. there is a beneficiary for whom the trustee holds the trust property;
4. there is a designation of the subject matter or property covered by the trust;
5. the legal estate vests in the trustee; and
6. the trustee is acting within the powers granted in the declaration of trust or in the Trustee Act, R.S.B.C. 1996, c. 464.

Dealing with Land Must Be Authorized by Law or by Trust Instrument: Section 180(7)(a)

All Trustees Must Concur in Disposition of Trust Property

All trustees who are still living must concur in the disposition of trust property, unless the trust instrument otherwise provides. The powers conferred on two or more trustees are not determined by the death of one of them, but survive to the other or others and devolve to all persons in the chain of representation. See s. 12 of the Trustee Act.

Out-of-Province Trustee May Act through Attorney

A trustee who resides out of the province may act within the province by an attorney unless the trust instrument expressly forbids it. See s. 55 of this Act.

Ademption

Where a testator (now a will-maker) in their will makes a specific devise of land, then subsequently sells the land under an agreement for sale, and the agreement remains in force at the time of the testator’s death, the doctrine of ademption applies, the devise fails, and the purchase money still owing falls into residue. (See Church, In Re (sub nom. Church v. Hill), 1923 CanLII 22 (SCC).) Whether a right to purchase is still in force is not a question for the registrar to answer. Where there is a right to purchase, the registrar refuses to register a specific devise unless the court directs that the estate passes to the applicant notwithstanding the right to purchase.

Power of Trustee to Sell to Pay Debts

The trustee has the power to sell the estate without the concurrence of the beneficiaries for the purpose of paying debts. The registrar may question this authority where it appears that the debt may be statute barred. Consequently, on the tender of a sale taking place more than two years (being the limitation period imposed for debts under the Limitation Act, S.B.C. 2012, c. 13) after the death of a will-maker, the registrar may require evidence that:

1. the limitation period has been extended, for example, by minority or disability;
2. the debt is for administration expenses incurred after the death of the will-maker and within the last two years;
3. the will authorizes the sale; or
4. the beneficiaries (being of full age and legal capacity) consent.

Note that s. 30 of the Limitation Act provides that where a pre-existing claim was discovered before June 1, 2013, and the limitation period under the former Limitation Act, R.S.B.C. 1996, c. 266, had not expired, the former Act applies to that claim.

Other Dispositions by Trustee May Require Consent of Beneficiaries

The following guidelines apply:

1. Trusts: The consent of beneficiaries of a trust to the sale of property will be necessary only if the trust instrument expressly requires their consent. Even if the trust instrument requires their consent, they do not all have to execute the transfer instrument, though all should provide their consent in writing.
2. Intestacies and Wills: See the “Consents” guidance under s. 155 of the Wills, Estates and Succession Act at “Wills, Estates and Succession Act, S.B.C. 2009, c. 13” in chapter 64 for suggested forms of declaration that may be used by applicants to cover the consent matters noted in s. 155.

Amendment of Register to Show Registered Owner as Trustee: Section 180(9)

Availability of Procedure under Section 180(9)

If the registered owner appears on the register to be beneficially entitled when in fact the registered owner is not and never has been, the registered owner can apply to have the registrar appropriately amend the register. The registered owner must produce:

1. an application requesting that the registrar amend title; and
2. the trust instrument, which must of itself establish to the registrar’s satisfaction that the registered owner was at the time they became registered, and still is, a trustee of the trusts set out in the instrument.

A registered owner cannot use the procedure under s. 180(9) if the registered owner was not a trustee when they became registered owner, and now merely wishes to convert themselves into a trustee. Instead, such a registered owner must transfer the title to themselves, in trust, by way of a Form A transfer coupled with a declaration of trust.

Form of Application for Amendment of Register to Show Registered Owner as Trustee for Fee Simple: Section 180(9)

Submissions

On the Form 17 Fee Simple, select Nature of Interest, Application to Amend Title Owner s. 180(9), and attach an image of the original trust instrument. The application is accompanied by a Property Transfer Tax form.

Form of Application for Amendment of Register to Show Registered Owner as Trustee for Charge: Section 180(9)

Submissions

On the Form 17 Charge, Notation or Filing, select Nature of Interest, Application to Amend Charge Owner s. 180(9) LTA (PTT), or where applicable, Application to Amend Charge Owner s. 180(9) LTA (No PTT), and attach an image of the original trust instrument.

Judgment Registered against Title

Where the registrar receives an application under s. 180(9) and there is a judgment registered against title, the registrar serves a combined s. 212 (Form 29) and s. 294.6(e) or s. 303(e) notice in the form reproduced below on the judgment creditor before proceeding with the s. 180(9) application. The registrar should inform the applicant registered owner of this procedure before sending the notice to the judgment creditor.

Amendment to Title

In granting the application, the registrar amends title by adding the words “in trust, see (doc#)” following the name and address of the trustee.

Modification of Existing Trust Agreement: Section 180(10)

Availability of Procedure under Section 180(10)

An applicant may present an instrument for registration which modifies an existing trust instrument. The registrar notes the fact of the modification on title after checking the modification instrument against the original trust instrument to determine the nature of the alteration. The registrar endorses the running serial number of the modification instrument on title and makes the following notation on title:

IN TRUST: SEE KD 1234 AND KD 2456

Form of Application for Modification of Existing Trust Agreement pertaining to Registered Owner of Fee Simple: Section 180(10)

Submissions

On the Form 17 Fee Simple, select Nature of Interest, Application to Amend Trust s. 180(10) LTA, and attach an image of the original trust instrument.

Form of Application for Modification of Existing Trust Agreement pertaining to Registered Owner of Charge: Section 180(10)

Submissions

On the Form 17 Charge, Notation or Filing, select Nature of Interest, Application to Amend Charge Owner s. 180(10) LTA (PTT), or where applicable, Application to Amend Charge Owner s. 180(10) LTA (No PTT), and attach an image of the original trust instrument.

Dealing or Assignment Among Beneficiaries: Section 180(9) and (10)

A dealing or assignment among beneficiaries, even if it results in a change of interest and not of beneficiaries, creates a new trust which cannot be dealt with under s. 180(9) or (10).

CROSS REFERENCES AND OTHER SOURCES OF INFORMATION

Trustees and Personal Representatives

See chapter 64 (Trustees, Personal Representatives, and Trustees in Bankruptcy) for further information about trustees and personal representatives and the various statutes that affect their dealings with land.

First Nations

See s. 365.3 of the Land Title Act regarding First Nations that hold lands in a fiduciary capacity being subject to s. 180.

Return of Original Trust Instrument

See s. 38 of the Act, which enables the registrar to create a duplicate of a trust instrument and return the original to the applicant at the time of filing.

Registration of Indefeasible Title

See s. 34 of the Act, which exempts s. 180 from the requirement that the registrar must not register an indefeasible title in favour of a person under a direction contained in a court order unless the order declares that a good safe holding and marketable title has been proven to the satisfaction of the court.

Filing of Probate or Administration Instruments

See ss. 265 and 266 of the Act regarding the documents required by the registrar before an application to register a transmission of land or a charge consequent on the death of a testator or intestate.

Power to Subdivide and Dedicate

See s. 26 of the Property Law Act in chapter 56 (Property Law Act, R.S.B.C. 1996, c. 377) regarding the power of a trustee or personal representative to subdivide and dedicate land.

Applications for Registration of Time Share Plans

Time share arrangements may be accomplished by way of trusts. While applications for registration of time sharing arrangements show considerable variation, one method is to make a leasing arrangement under which the lessee holds the premises and lease in trust for the lessor and has the power to assign portions of the leasehold estate to tenants or purchasers. See the Real Estate Development Marketing Act, S.B.C. 2004, c. 41 regarding time share plans.

Secondary Sources

See Di Castri, Registration of Title to Land, vol. 2, §16:7, §16:21, and §16:46, and vol. 3, §22:26.

CASE LAW

Effect of Notice of Trust on Title

The plaintiffs, two of three children left an equal share in three properties to be held in trust by their mother under the provisions of their father’s will, probated in 1924, contested a conveyance of the properties made by the mother in 1948 to the third child and the subsequent disposition of the properties by him under his will. While it was uncertain how the register appeared when the properties were conveyed in trust to the mother, the instrument conveying title to the third child in 1948 made reference to the grantor “(In Trust Filing No. 14292)”. The filing number referred, among other things, to the letters probate of the father’s will. The third child’s certificate of indefeasible title made no reference to the trust. Section 148(2) of the Land Registry Act, R.S.B.C. 1948, c. 171, the predecessor of the current Land Title Act, s. 180(7), governed the application for registration of that transfer made in 1949, and imputed notice of the contents of the filing to the third child. His actual knowledge of the trust was not necessary. Consequently, he took subject to the terms of his father’s will when he acquired title from his mother. Although the certificate of title did not make note of the trust, the trust was not defeated, and the third child and his and registry act personal representative were not freed of the burden of the trust. Because there was no intervening conveyance to an innocent third party, the trust was still capable of being performed (McRae v. McRae Estate, 1994 CanLII 405 (BC CA), affirming [1992] B.C.J. No. 2036 (QL) (S.C.), leave to appeal refused [1994] S.C.C.A. No. 274 (QL)).

Alter Ego Trusts

An individual, as registered owner in fee simple of a property, created a trust (the “Alter Ego Trust”) retaining bare legal title and divesting beneficial interest in the property to the trust beneficiaries. The change in interest was not registered under the Act. After the individual’s death, the executor applied to register indefeasible title in the executor’s name. The registrar refused the executor’s application on the grounds that the bare legal title held by the deceased and transmitted to the executor on his death was not a good safe holding and marketable title as required under the Act. The trial judge directed the registrar to register indefeasible title in the name of the executor. The Court of Appeal set aside the trial judgment and found that, after the creation of the Alter Ego Trust, the individual no longer had a good safe holding and marketable title and therefore, at law, after the individual’s death, the only interest that could be transmitted to the executor was the interest held by the deceased at the date of his death. Accordingly, the executor was entitled to apply to the registrar to register the trust under s. 180 of the Act, but he was not entitled to register the indefeasible title to the property in his name as executor without specific reference to the trust because he did not have a good safe holding and marketable title (Smith v. Graham, 2009 BCCA 192). See also the court’s description of a good safe holding and marketable title in the annotation for this case under ss. 169, 187, 197, or 260 of the Act.

Unregistered Trust Ineffective Against Third Party

The defendants, a daughter and her parents, bought a house and registered their interests in the property on title, showing 99% ownership in the daughter and 1% in the parents. Later, the daughter married the plaintiff and he contributed substantial sums to the mortgage and maintenance of the house. In divorce proceedings, the daughter and her parents claimed that the parents held a 50% interest in the house by way of a trust. The court found that the evidence was inconsistent with the trust claim and, in any event, the plaintiff’s interest in the house was protected by the Torrens system. Relying on Smith v. Graham, 2009 BCCA 192, the court affirmed that, if parties elect not to register a trust under s. 180 of the Land Title Act, third parties, in this case, the plaintiff, dealing with trustees as registered owners are protected under ss. 23, 29, and 30 of the Act. The plaintiff’s position with respect to the trust claim was analogous to that of a bona fide purchaser for value. The plaintiff had no notice of the trust claim during the time that his interest in the property accrued, and accordingly, s. 29(2) of the Land Title Act had no application. In the result, the court declared that the daughter’s 99% interest in the home was a family asset subject to division in the divorce proceedings (Lakhani v. Hennig, 2011 BCSC 1007).

Powers of Trustees

A mortgagee sought a standard order nisi of foreclosure and was opposed by the beneficiaries of a trust for whom the mortgaged property was held. The court held, based on the evidence then before it, that the trustee had no power to mortgage under the trust. In accordance with Dukart v. Surrey (District), 1978 CanLII 214 (SCC), the notation on title that the registered owner of the lands was “Joy Nan Maxham … In Trust DD EB68233” was sufficient registration of the trust and its terms under s. 180. Therefore, the subsequent mortgage of the applicant ranked second behind the trust agreement and was ineffective against the interests of the trust beneficiaries. Because the title alerted the mortgagee to the existence of the trust, it was the mortgagee’s duty to determine whether or not the owner in fee simple had the right to mortgage. Mortgage monies advanced without an enquiry were advanced at the mortgagee’s peril, though the mortgagee was entitled to stand as a creditor of the estate to the extent that the mortgaged money had been properly applied (Montreal Trust Co. of Canada v. Maxham, 1993 CanLII 2453 (BC SC)). In further proceedings, the mortgagee was able to show that a power to mortgage did in fact exist in the trust documents. The mortgagee was granted a declaration that it had a valid first mortgage against the property and was entitled to foreclose (1995 CanLII 2903 (BC SC)).

Transfers of Trust Property to Beneficiaries

Notes on Case Law: Cases involving the transfer of trust property from a trustee to the trust beneficiaries have frequently focused on liabilities for property transfer tax. For annotations of such cases, see s. 2 of the Property Transfer Tax Act in chapter 57 (Property Transfer Tax Act, R.S.B.C. 1996, c. 378).