20 Unregistered Instrument Does Not Pass Estate

CROSS REFERENCES AND OTHER SOURCES OF INFORMATION

Equitable Mortgage Created by Deposit of a Duplicate Certificate of Title

An equitable mortgage can be created by the deposit of a duplicate indefeasible title but is not registrable, as provided by s. 33 of the Act.

Effect of Court Order Enforcement Act

See s. 86 of the Court Order Enforcement Act in chapter 38 (Court Order Enforcement Act, R.S.B.C. 1996, c. 78), which provides that registered judgments form a lien and charge on the land of a judgment debtor to the extent of the judgment debtor’s beneficial interest only and are therefore subject to some prior unregistered interests. The rule is that a judgment can only charge a judgment debtor’s land to the extent of the judgment debtor’s beneficial interest in it.

Delivery of Registrable Instruments

See s. 5 of the Property Law Act in chapter 56 (Property Law Act, R.S.B.C. 1996, c. 377) regarding the obligation of a transferor or a landlord, subject to a contrary agreement, to deliver a registrable instrument to the transferee or tenant.

Secondary Sources

See generally Di Castri, Registration of Title to Land, vol. 2, §12:8, §12:12, §17:8, §17:10, and §17:11.

CASE LAW

Equitable Interests

Notes on Case Law: Although s. 20 states that no instrument is operative until it is registered, the courts have not always interpreted the section strictly and, on occasion, have construed it as permitting an unregistered instrument to create an equitable interest or estate which affects parties beyond the person making the instrument. Various examples are cited below.

Purpose of Registration

It is registration that vests title, thereby certifying the indefeasibility of the title, or extinguishes the title (Re Skinner (1894), 6 Q.L.J. 68 (Aust. Civil Ct.); Commonwealth v. State of New South Wales (1918), 25 C.L.R. 325 (Aust. H.C.); and Dobek v. Jennings, 1927 CanLII 299 (AB CA)).

Transfers of Land

Right to Registration

The owner of three properties executed transfers to himself and another as joint tenants, but the transfers were not registered until the day after the transferor’s death. Nonetheless, the transfers were effective the day they were signed by the transferor and carried with them the right to apply for registration even after his death. The interests conferred by the transfers could be defeated by prior registration by a third party but could not be defeated by the deceased or his personal representatives. When the transferor died the properties were not vested in him and accordingly could not vest in his representatives (Chung Estate v. Chan, 1995 CanLII 2088 (BC SC) (Chambers), appeal dismissed 1995 CanLII 2787 (BC CA)).

Prior to her death, Plecas executed a Form A transfer leaving her farm property to the defendant, her son. Due to the tax implications of immediate registration, Plecas instructed her lawyer to register the transfer only after her death. The plaintiff, Plecas’ grandson, brought this action seeking to have the transfer overturned on the grounds that it was incomplete and that Plecas had never relinquished control of the properties. The court disagreed, stating that, under s. 20 of the Land Title Act, the transfer was effective against Plecas upon execution and that the executed transfer carried with it the right to apply for registration even after her death (Plecas v. Plecas, 2015 BCSC 464 (Chambers)).

Non-Derogation from Grant

The appellants were owners or tenants of two commercial premises located on Lot 3. Lot 3 was purchased in April 1992 from one of the respondents, who also owned an adjoining parcel, Lot 1. Lot 1 included vacant land and a closed public lane. The vacant land was subject to a covenant in favour of the municipality restricting its use to parking for “adjoining commercially zoned lands”. For a number of years, the closed lane was used by the appellants for access to the rear of their premises. One of the respondents’ tenants fenced the parking lot, thus blocking the appellants’ access to it. Later, the tenant also removed the lane curb and constructed a fence across the closed lane, effectively preventing the appellants from accessing the rear of their premises in any way. The majority of the Court of Appeal found (at para. 41) “no interference with the Torrens system in ss. 3 and 6 of the Land Transfer Form Act, R.S.B.C. 1996, c. 252 or in the doctrine of non-derogation from grant those provisions accommodate”. Indeed, s. 20 of the Land Title Act preserves the right of a grantee to apply for registration of an interest obtained under an unregistered instrument from the original grantor. The majority of the court found no evidence of anything on the ground or in the various instruments that implied the grant to the appellants of a legal interest in the parking lot as it existed in April 1992. Furthermore, no municipal bylaw could give the rights of an owner of one lot to the owner or tenants of another lot. However, the majority also found that the appellants were entitled to apply to register an easement over that portion of the closed lane on Lot 1 lying behind their premises. The court accepted as persuasive evidence that the markings on the parking lot, as they existed in 1992, were suggestive of a common laneway and that the two doors at the rear of the premises on Lot 3 had been used to provide access from the closed lane to the premises since their construction. The use of the lane was an accommodation to Lot 3 of a nature that might be the subject of a legal easement. The easement itself was necessary to the reasonable enjoyment of Lot 3, and it was being continuously and apparently used by the respondents for the benefit of Lot 3 at the time Lot 3 was acquired by the appellants from the respondents. The respondents knew that the appellants would continue to use the premises for commercial purposes and that they would continue to require access from the closed lane. In allowing the appeal with respect to the closed lane, the majority held that its decision was not unfair to the respondents and that the decision fell within the most conservative view of the doctrine of non-derogation from grant as between a grantor and a grantee and s. 20 of the Land Title Act (Babine Investments Ltd. v. Prince George Shopping Centre Ltd., 2002 BCCA 289, reversing, but affirming in part on other grounds 2000 BCSC 1207). With respect to the restrictive covenant and the parking lot, see the annotation for this decision under s. 25 of the Property Law Act at chapter 56 (Property Law Act, R.S.B.C. 1996, c. 377). See also the annotation for this decision under s. 3 of the Land Transfer Form Act at chapter 50 (Land Transfer Form Act, R.S.B.C. 1996, c. 252) of this Manual.

Priority over Judgments

The registered owner executed and delivered a transfer of land which was not registered. A judgment was then registered against his interest. Because an unregistered instrument is operative against the party making it, there was no interest in land to which the judgment could attach. The debtor, the registered owner, had divested himself of his interest before registration of the judgment (Davidson v. Davidson, 1946 CanLII 12 (SCC), affirming 1945 CanLII 501 (BC CA)).

Order for Possession

An unregistered document (executed by a person with a registered title or interest) purporting to transfer an interest in land gives an equitable interest in the land to the transferee. Such an equitable interest can be the basis for a court order giving possession of the land to the transferee (Forrest v. Howe, 1951 CanLII 283 (BC CA)).

Transfer by a Joint Tenant

Neither s. 20 nor any other section of the Act alters the common law that the execution of a transfer by a joint tenant of that tenant’s interest severs the joint tenancy, even though the transfer is not registered (Stonehouse v. Attorney General of British Columbia, 1961 CanLII 48 (SCC)). For a discussion of the relationship between registration and the severance of a joint tenancy, see McClean, “Severance of Joint Tenancies”, (1979) 57 Canadian Bar Review 1.

Priority of Restraint Order

The Crown obtained a restraint order under s. 14 of the Controlled Drugs and Substances Act against property owned by B. On September 4, 2008, the order was registered against title to the property. Shortly before that date, the applicant in this action, a bank, carried out a search of the title to the property, entered into a mortgage with B, and advanced the sum of $120,000 to B. The bank took no steps to register its mortgage until September 26, 2008, when it learned that the restraint order had been registered on title. In this action, the bank sought to assert the priority of its unregistered mortgage over the restraint order. The court found that, under s. 14 of the Act, registration of the restraint order was mandatory. The purpose of registration was to ensure that notice was available for all who might wish to deal with the property and that the rights of persons interested in the property could be affected by the restraint order from the date of its registration. In dismissing the bank’s application, the court confirmed the priority of the restraint order over the bank’s unregistered mortgage (R. v. B. (A.V.), 2009 BCSC 1807).

Effect of Offer to Purchase

When a vendor accepts an offer to purchase, which is not registered, this instrument can create a defect in the vendor’s title if the vendor accepts a subsequent offer to purchase from a second purchaser and is compelled by an order for specific performance to convey the land to the first purchaser (A.V.G. Management Science Ltd. v. Barwell Developments Ltd., 1978 CanLII 180 (SCC)).

Sale of Timber

The sale of standing timber to be cut and removed from the land is a transaction concerning land and is governed by s. 20 (formerly, s. 35) (Carlson v. Duncan, 1931 CanLII 324 (BC CA)).

Lease for a Term Exceeding Three Years

The lessee under an unregistered lease for a term exceeding three years has an interest enforceable against the lessor (although not against a bona fide purchaser for value without notice) and is entitled to compensation for the interest if the land is expropriated (R. v. Middlebrook and Muzyka, 1967 CanLII 370 (SK QB)).

For a discussion of the intended operation of ss. 20, 73, and 73.1, see the annotation for Marine Masters Holdings Ltd. v. Greater Victoria Harbour Authority, 2009 BCSC 953, under s. 73.1 of the Act.

Unregistrable Instruments

Licences

An agreement between the defendant E and the defendant M permitting utility lines from E’s property to cross M’s property was not registered and was not enforceable against a subsequent purchaser of E’s property. Nor was the agreement an equitable easement capable of registration because E and M never intended that the agreement should run with the land (Bolton v. McMurdoch (1983), 27 R.P.R. 286 (B.C.S.C.)).

Separation Agreement

The respondents, husband and wife, owned property subject to a number of encumbrances including the petitioner’s judgment. Before judgment was registered, the respondents entered into an unregistered separation agreement. The separation agreement purported to release the husband from any further interest in the property once certain conditions with respect to child support were met. In confirming the husband’s continued interest in the property and upholding the petitioner’s right to execute on the judgment, the court found that the separation agreement did not have the effect of transferring the husband’s beneficial interest in the property to his wife until each of the conditions were met. As all of the conditions had not been met, the husband’s entire beneficial interest had not been transferred to his wife and the separation agreement could not be relied upon to defeat the petitioner’s claim (Canada (Attorney General) v. Taylor, 2006 BCSC 660).

Contractual Rights

The court found the plaintiffs’ interests in foreshore areas are not easements at law, even though described as such in lease agreements and registered as such with the land title office. They are not interests that run with the land. At most, they are unregistered contractual rights, personal to and enforceable against only the grantor, per ss. 20 and s. 26 of the LTA. Accordingly, they cannot give rise to riparian rights enforceable against the defendant commercial oyster harvester or other third parties (555094 B.C. Ltd. v. Aphrodite’s Garden Oyster Co. Ltd., 2022 BCSC 461).