186 Implied Covenants

FORMS

Transfer Form Completion Instructions: Freehold Estate Transferred

A Form A that contains an Exception, Reservation, or Condition in favour of, or for the benefit of, the transferor that is an interest in land capable of registration under the Land Title Act must be clearly defined in an electronic Form E. The transferor must apply concurrently to register that interest in an electronic Form 17 Charge, Notation or Filing.

PRACTICE

Freehold Estates

The Act recognizes the following freehold estates:

1. fee simple;
2. life estate;
3. determinable fee simple; and
4. fee simple on condition.

Words of Transfer or Limitation

Subject to express words of limitation, reservation, or condition, s. 186(4) of the Act provides that express words of transfer are not necessary to transfer a freehold estate. Under s. 186(5), no words of limitation are necessary to create or transfer a fee simple absolute. However, s. 186(6) recognizes that words of limitation are required to create a life estate, a determinable fee simple, or a fee simple on condition.

Life Estate

A life estate is created by a freehold transfer using the words of limitation “For the life of the Transferee”. Although a life estate is created on a freehold transfer, a life estate is registered in the same manner as a charge.

Determinable Fee Simple (Possibility of Reverter)

A determinable fee simple is an estate that determines or comes to an end automatically upon the happening of the event specified in the words of limitation. Thus, a freehold transfer to “A for so long as the Church of St. Andrews shall stand” creates a freehold estate that comes to an end when the church building ceases to stand. The specified event must be one that may never happen; otherwise, the estate would not be a fee simple.

Words of limitation that indicate duration such as “for so long as”, “during”, “while”, and “until” are used to create a determinable fee simple. Once created, the grantor has a “possibility of reverter” or a possibility of acquiring a vested estate in the future. Characterized as a mere possibility, a “possibility of reverter” is not an interest in land.

Undivided Interests

Where a determinable fee includes undivided interests, the Form A must show:

1. above the legal description, the undivided interest;
2. below the legal description, the number for the possibility of reverter; and
3. in Item 5 of the transfer, the words “DETERMINABLE FEE SIMPLE”.

Electronic Submissions: A Crown Grant, Form A, Amended Letters Patent under the Great Seal or Instrument of Grant, in a form satisfactory to the Attorney General, is in the class of supporting documents designated by the director for electronic filing. On the Form 17 Charge, Notation or Filing select nature of interest Possibility of Reverter and describe the document that includes the words of limitation, or attach an image of the original supporting document.

Fee Simple on Condition (Right of Entry)

A fee simple on condition is created by using words of limitation that include a condition permitting the grantor to cut the estate short. In contrast to a determinable fee simple, a fee simple on condition ends only when the event specified in the condition occurs and the grantor takes steps (re-enters) to bring the estate to an end. The determination is not automatic.

Words of limitation indicating that the estate is conditional such as “provided that” or “but if” are used to create a fee simple on condition. The conditions are said to describe the limits of the estate rather than its duration. Once created, the grantor has a “right of re-entry” or a “right of entry for condition broken”.

Electronic Submissions: A Crown Grant, Form A, Amended Letters Patent under the Great Seal or Instrument of Grant, in a form satisfactory to the Attorney General, is in the class of supporting documents designated by the director for electronic filing. On the Form 17 Charge, Notation or Filing, select nature of interest Right of Entry and describe the document that includes the condition, or attach an image of the original supporting document.

Registration

Section 10(4) of the Property Law Act provides for the registration of a possibility of reverter and a right of re-entry in the same manner as a charge.

Effect of Existing Charges and Encumbrances

Unless otherwise specified in a court order, a title registered in consequence of a re-entry or reverter will remain subject to all existing charges and encumbrances registered at the time of the re-entry or reversion.

Disposition

Section 8 of the Property Law Act provides for the disposition of a possibility of reverter and a right of re-entry. Both may be transferred by way of mortgage or quit claim.

Cancellation

To cancel the registration of a possibility of reverter or a right of re-entry, the registrar requires a Form C Release containing quit claim language transferring and releasing the right or possibility to the registered owner. The quit claim language must be added on a Declaration Form appended to the Form C Release.

Revesting of Fee Simple

Where the holder of a possibility of reverter or right of re-entry seeks a revesting of the fee simple in accordance with the limitation or condition, the registrar requires one of the following:

1. a conveyance of the fee simple from the registered owner to the holder of the right or possibility, in Form A; or
2. an order of the court declaring that the holder of the right or possibility has a good safe holding and marketable title to the fee simple estate coupled with an order vesting the fee simple estate accordingly.

Exception or Reservation from Grant

An applicant may also use Item 5 to qualify the nature of the freehold estate passing by entering an exception or reservation from the grant.

Rights or interests of the transferor excepted or reserved in Item 5 must be capable of registration as a charge and the transferor must concurrently apply for registration under s. 181 of the Act in Form 17.

Electronic Submissions: A Crown Grant, Form A, Amended Letters Patent under the Great Seal or Instrument of Grant, in a form satisfactory to the Attorney General, is in the class of supporting documents designated by the director for electronic filing. On the Form 17 Charge, Notation or Filing select the appropriate Reservation and describe the document that includes the reservation or attach an image of the original supporting document.

Title Subject to Certificate of Pending Litigation

If, at the time of execution of a transfer, the applicant intends to register title subject to a certificate of pending litigation, the appropriate entry may be made in Item 2 (Parcel Identifier and Legal Description of Land) or a Declaration form for electronic submissions or in Item 5 or in Item 2 (Parcel Identifier and Legal Description of Land) for hardcopy submissions. If that decision is made after execution, an applicant must file a separate election as required under s. 216(2)(b) of the Act.

CROSS REFERENCES AND OTHER SOURCES OF INFORMATION

Implied Covenants

See the Land Transfer Form Act in chapter 50 (Land Transfer Form Act, R.S.B.C. 1996, c. 252) regarding the covenants that are, unless expressly excepted or qualified, deemed included in a transfer.

Life Estates Subject to Trust and Settlement Variation Act

See s. 4 of the Trust and Settlement Variation Act, R.S.B.C. 1996, c. 463, which authorizes the Supreme Court to make an order by which the holder of a life estate is deemed to hold the land in trust for themselves and the holders of successive interests in the land.

Secondary Sources

See Di Castri, Registration of Title to Land, vol. 1, §8:2 and §8:55.

CASE LAW

Effect of Section 186

A person executing an approved transfer form gives the rather extensive covenants set out in Schedule 2 of the Land Transfer Form Act (Caplan v. Coles, 1983 CanLII 456 (BC SC)).