241 Cancellation Of Registration Of Charge

PRACTICE

Merger on Transfer of Fee Simple to Mortgagee

The registrar does not register a transfer of the fee simple to a mortgagee and a merger of mortgage (except under a foreclosure order or order for sale), unless the mortgagee has executed the instrument and the execution is proved in the manner required by Part 5 of the Act, or the mortgagee or the mortgagee’s solicitor signs the application to register. Particular care must be taken because in some instances mortgagees have not agreed to or acquiesced in a transfer or merger. Therefore, in Item 1 of the transfer form, the applicant must request a merger.

Application to Cancel Head Mortgage Where There Is a Registered Submortgage

The registrar refuses an application to cancel a head mortgage where there is a registered submortgage unless the applicant provides:

1. a discharge of the head mortgage executed by both the head mortgagee and submortgagee; or
2. separate discharges of the head mortgage and submortgage executed by the respective mortgagees.

In either case, the registrar cancels registration of the head mortgage and submortgage.

Surrender of Lease

Lessor Should Acknowledge Surrender of Lease

As with other forms of releases, a lessee must use Form C to surrender or quit claim a leasehold interest. No Part 2 of the General Instrument is necessary. The registrar requires that the lessor acknowledge the surrender of the lease by the lessee. A lessor may make this acknowledgment by executing the surrender of lease, or, as is the more usual practice, the lessor, or the lessor’s solicitor or agent, may make the application for cancellation under s. 241 of the Act.

Registrar Checks for Additional Interests That Should Be Cancelled

When cancelling a lease, an applicant must deal with all derivative charges. The registrar checks for any interests that should be cancelled at the same time, such as a sublease, a mortgage of the lease, or a judgment registered against the lease. In some instances, a sublease may be enlarged to become a lease. See s. 38 of the Property Law Act, R.S.B.C. 1996, c. 377.

Where there is a mortgage of a lease, the registrar requires a discharge of mortgage.

In the case of a judgment registered against a lease, the applicant may either present a release of judgment, or claim priority over the judgment and ask the registrar to serve notice on the judgment creditor of the registrar’s intention to cancel the judgment on cancellation of the lease.

Cancellation of Life Estate

The holder of a life estate wishing to terminate the life estate must use a Form C to surrender or quit claim that interest. No Part 2 of the Form C General Instrument is necessary.

Submissions

Use the Form C Release to cancel a charge. All derivative charges must be dealt with at the same time.

CROSS REFERENCES AND OTHER SOURCES OF INFORMATION

Power of Supreme Court to Cancel or Modify Charge

See s. 35 of the Property Law Act regarding the power of the Supreme Court to cancel or modify a charge.

Secondary Sources

See Di Castri, Registration of Title to Land, vol. 2, §10:9, §10:12, §12:30, §12:31, and §13:161, and vol. 3, §21:11.

CASE LAW

Cancellation of Judgments

A judgment creditor registered and then renewed a certificate of judgment against the land of the judgment debtor. The debtor applied to the court to strike out the certificate on the basis that the renewal was improper and an abuse of process. The renewal was for the full amount of the original judgment and did not credit the debtor with the money he had paid before the renewal date. The court dismissed the application. Although s. 241 authorizes a registrar to cancel a registered charge, a court has no authority to do so. Under ss. 86 to 91 of the Court Order Enforcement Act, R.S.B.C. 1996, c. 78, the function of a court registrar is only to certify the existence of the judgment, not to determine what amount may still be owing under it. It is not an abuse of process for a court registrar to do what the two Acts permit. When the creditor comes to enforce the judgment, the creditor must account for what has been received in payment of the judgment. If the debtor wishes to remove the judgment from title, the debtor can pay the outstanding balance, or, if there is a dispute as to the amount owed, commence proceedings for an accounting (McKay v. McKay, [1992] B.C.J. No. 2219 (QL) (S.C. Master)).

Discharge of Mortgages

The petitioners refused to discharge two mortgages on the respondents’ condominium project. Sale proceeds were paid into the trust account of the petitioners’ solicitors. To prevent the erosion of equity (by continued accrual of interest) during litigation to resolve competing priorities among lien claimants, the petitioners provided a letter of credit to secure the lien claims and applied the sale proceeds against the outstanding mortgage. Although the mortgage was fully repaid at the time of the hearing, it was drawn to secure a current and running account and the plaintiff had an exposure on the letter of credit until the lien claim priorities were resolved. In these circumstances, there was just cause for refusing to discharge the mortgages (Metropolitan Trust Co. of Canada v. Dancorp Developments Ltd., 1993 CanLII 980 (BC SC), affirmed 1993 CanLII 402 (BC SC) (Chambers)).