34 Registration Of Indefeasible Title By Court Order

PRACTICE

Registration of Indefeasible Title by Court Order

Section 34 requires the court to make a declaration to the effect that a good safe holding and marketable title exists as a condition of directing the registrar to register an indefeasible title or charge.

Determination of Good Safe Holding and Marketable Title

The mandatory requirement in s. 34 applies only if a court order directs the registrar to register an indefeasible title or charge. Where the court order does not contain a declaration as to a good safe holding and marketable title, the registrar has no authority to comply with the direction in the order unless the order contains other apt words that enable the registrar to determine that a good safe holding and marketable title exists. Examples include:

(1) a declaration that a named individual is the sole beneficial and legal owner of the interest;

(2) vesting language, including expressions such as the described land “be conveyed to and vested in” a specified person; or

(3) foreclosure orders, which by operation of law, extinguish the borrower’s right to redeem.

Effect of Vesting Language

Where the court order does not contain a direction to the registrar but the court order contains vesting language, the vesting language operates in the same way as words of transfer and the registrar gives effect to the order in the same way as a freehold transfer or other conveyancing instrument.

CROSS REFERENCES AND OTHER SOURCES OF INFORMATION

Trust Estates

See s. 180 of the Act regarding the recognition of trust estates.

Court Orders

Section 313 of the Act stipulates that the registration of a title or charge made under a court order stands in the same position and has the same force as a registration made under an instrument other than a court order.

Vesting Orders

See s. 37 of the Law and Equity Act regarding the court’s authority to vest property by order and its effect. An order of the court that contains vesting language operates in the same way as words of transfer in a conveyancing instrument and may be equivalent to a declaration that a good safe holding and marketable title exists.

Property Division

See s. 97(2)(b) of the Family Law Act (set out at “97 Giving effect to property division” in chapter 41) regarding the court’s authority to give effect to property division, including the authority of the Supreme Court to order title to a specified property be vested in the spouse.

Secondary Sources

See Di Castri, Registration of Title to Land, vol. 1, para. 104.

CASE LAW

Transmission in Bankruptcy Proceedings

The petitioner’s trustee in bankruptcy applied for an order approving the sale of two of the petitioner’s properties and for an order vesting those properties in the name of the purchasers. The duplicate indefeasible titles for the properties were not available to the trustee, although they had been issued to the petitioner and they may have been provided, subsequently, to one or more of the petitioner’s investors. In such circumstances, the trustee was not in a position to swear an affidavit under s. 193(1) of the Act to the effect that the duplicate indefeasible titles had been lost or destroyed. However, a trustee in bankruptcy must deal with all of the assets of a bankrupt and must distribute the sale proceeds in accordance with the provisions of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3. In this role, a trustee in bankruptcy is different from an ordinary vendor because the trustee would not be in a position to distribute the sale proceeds without taking into account well-known priorities and the interests of a person or company who may have received a duplicate infeasible title as part of a security arrangement entered into by the petitioner with one of its investors or creditors.

Accordingly, the court found that it was appropriate for the trustee to use s. 34(1) of the Act for the purpose of providing the purchasers with “good safeholding and marketable title”. In granting the orders and approving the sale, the court further ordered that the trustee in bankruptcy hold the funds pending a further order of the court and provide appropriate notice to the petitioner’s investors and creditors of its intention to distribute the funds in accordance with the provisions of the Bankruptcy and Insolvency Act (Re Taylor Ventures Ltd., 1999 CanLII 4674 (NB CA)).

Transmission of Strata Property on Foreclosure

A sale of strata property in foreclosure proceedings made under a court order is a “transmission” of ownership as that term is defined in s. 1. It is not a “transfer” and therefore is not a conveyance. Section 256 of the Strata Property Act is inapplicable to such transactions, and no Form F is required. However, the court order vesting the property must include a declaration to the effect that a good safe holding and marketable title exists (People’s Trust Co. v. Meadowlark Estates Ltd., 2003 BCSC 1321 (Master), affirmed 2005 BCSC 51, citing CIBC Mortgage Corp. v. Spreeuw, 2001 BCSC 1729 (Master)). See also the annotation for these decisions under s. 1 of the Land Title Act in chapter 1 (Land Title Act Part 1 (ss. 1 to 3)—Definitions, Interpretation and Application), s. 34 of the Land Title Act in this chapter and ss. 116 and 256 of the Strata Property Act in chapter 57 (Strata Property Act, S.B.C. 1998, c. 43).

Vesting Order Not Available before Application to Register

The petitioners applied to court for a declaration vesting an estate’s trust property in the estate’s executors. The declaration was sought before the petitioners made any attempt to register a transfer of the trust property in the land title office. The court dismissed the petitioners’ application because the petitioners had not complied with the provisions of the Land Title Act. There was no application to the registrar to register the transmission, the petitioners did not follow established statutory procedures for resolving disputes with the registrar before commencing court proceedings, and the court did not have before it any reasons from the registrar for refusing to register the transmission. The fact that two other applications for registration in similar circumstances had been rejected by the registrar and were now under appeal to the court was not grounds for the court to infringe on statutory mechanisms for receiving, reviewing, and approving or rejecting an application to register a transfer of property (Re Estate of Delesalle, 2007 BCSC 1527).

Effect of Unregistered “Alter Ego Trust”

For a discussion of the effect of an unregistered “Alter Ego Trust” on a good safe holding and marketable title, see the annotation for Smith v. Graham, 2009 BCCA 192, under s. 180 of the Act in chapter 12 (Land Title Act Part 11 (ss. 169 to 184)—Registration in Fee Simple).