6 Vendor Or Transferor To Register Own Title

CASE LAW

Vendor Holds Agreement for Sale

The vendors (who were not registered owners but who had an enforceable agreement for sale) covenanted to convey property to the purchaser. Under the covenant, the purchaser had the right to demand a conveyance from these vendors and to refuse a conveyance from a third person. Under the obligations imposed under the agreement, and by virtue of s. 6 of the Property Law Act, the vendors were obliged to get title into their own names so they could complete by their own conveyance, without the need of conveyance from any third person, and also to get their title in sufficient time to enable them to complete by registrable conveyance on the completion date (Stewart v. Friedrichsen, 1960 CanLII 323 (BC CA)).

P made an offer to purchase to D, which was acting as receiver manager of N. N held an agreement for sale of the subject property from the registered owners. The transfer tendered to P was executed by N and the registered owners as transferors. Having refused to complete, P argued that it was not obliged to accept such a transfer and pointed to s. 6 in support of its argument. The court held that s. 6 had no application in the circumstances. P’s agreement was neither an agreement for sale nor one by which the purchase price was payable by instalments. Furthermore, the transfer was duly executed by N by its receiver manager, the party to the purchase offer. The fact that the registered owners were additional co-covenantors was no ground for objection because P received the covenant contracted for. The presence of additional covenantors did not detract from that. Finally, P’s agreement was for the conveyance of “all of the vendor’s rights, title and interest”. The vendor’s interest was under an agreement for sale and the document tendered would have been effective to transfer that interest (Pan Pacific Specialties Ltd. v. Deloitte & Touche Inc., 1995 CanLII 3014 (BC SC)).

Title Held by Vendor’s Company

C entered into an interim agreement with a purchaser for the sale of property. A limited company wholly owned by C, and not C himself, actually owned the property. The purchaser refused to complete the transaction on the ground, among others, that the transfer was from the limited company and not C himself. The interim agreement contemplated that C would provide a transfer in registrable form. The effect of this provision, combined with the requirement in s. 6 of the Act, meant that the purchaser was entitled to C’s covenants. The purchaser was not obliged to accept a conveyance from anyone other than the contracting party because he was entitled to the covenants for title from the party with whom he had made his agreement (Caplan v. Coles, 1983 CanLII 456 (BC SC)).

Title Held by Vendor’s Nominee

See 299 Burrard Residential Limited Partnership v. Essalat, 2011 BCSC 996, reversed 2012 BCCA 271, leave to appeal refused 2012 CanLII 81027 (SCC).

Vendor Is Partnership

The plaintiff, a partnership, entered into a sale agreement as vendor to transfer two strata lots in a condominium building to the defendants after construction was completed. Title to the lots was held by C Ltd., one of the plaintiff’s two partners, as agent and nominee of the partnership. The sale agreement was executed by C Ltd. as managing partner for the plaintiff. Differences arose between the parties over the allocation of parking spaces and some other issues. The defendants declined to complete the purchase on the closing date, and the plaintiffs refused to return the defendants’ deposit of $391,000, claiming that it had been forfeited. On appeal, the court found that the partnership’s execution of a sale agreement bound the two partners to transfer title to the strata lots. The partnership itself could not or could not be required to prepare and tender the transfer documents for execution. Unlike a company, a partnership is not a legal entity recognized by law; partners carry on business both as principals and as agents of each other with respect to the business of their partnership. The plaintiff’s managing partner and trustee were both parties to the sale agreement. The partnership’s obligation to execute a transfer of title could be discharged upon the managing partner execution and delivery of the transfer. Accordingly, and contrary to the allegations of the defendants, the partnership was ready, willing, and able to transfer title to the lots on the closing date and there was no breach of s. 6 of the Act. The court allowed the partnership’s appeal, set aside the trial judge’s order for the return of the deposit to the defendant’s, and ordered the deposit held in trust pending the outcome of further proceedings (Coal Harbour Properties Partnership v. Liu, 2004 BCCA 283, reversing 2004 BCSC 15 (Chambers)).

Subdivision of Property Not Complete

The plaintiffs had agreed to purchase part of a property that was being subdivided into two lots. On the closing date, the subdivision plan had been “lodged for registration”. Under s. 6 of the Property Law Act and in a Torrens system of title registration, no one possesses, for the purposes of conveyance or transfer, any title until their name appears on the register as the owner of the property involved (Savage v. Benn, 1993 CanLII 710 (BC SC)). This case offers a contrary view to the decision in Oakmont Development Corporation v. Knight-Park Development Ltd., 1983 CanLII 179 (BC SC), in which, apparently, the judge was not referred to s. 6.

Vendor Unwilling or Unable to Register Title

In an action for specific performance of a contract for the sale of land, it is not necessary for a purchaser to show tender where the vendor has not registered their own title and refuses to convey (Burtini v. Sovilj, 1976 CanLII 1129 (BC CA)).

Where a plaintiff vendor has not cleared the title to their property of encumbrances on the closing date, is not in a position to give vacant possession of the property, and has not complied with the statutory requirement under s. 6 of the Property Law Act to register their title, the vendor is not in a position to object to the defendant purchaser’s repudiation of the contract. Although in this case the purchaser was not in funds to complete the transaction on the closing date, he could repudiate the contract with impunity because neither party was ready, willing, and able to conclude the contract of purchase and sale (Taylor v. Aramenko, 1992 CanLII 1556 (BC SC), affirmed 1994 CanLII 229 (BC CA)).

Waiver of Section 6

A purchaser cannot rely on the provisions of s. 6 if the purchaser has knowledge that the vendor does not have title to the subject property and has agreed to an alternative regime for completion by way of a direct transfer from the registered owner of the property. Such an agreement amounts to a waiver of the right to insist that the vendor register its own title before completion. Furthermore, s. 6 had no application to the case at issue because the purchase price was not payable by instalments or at a future time (410263 B.C. Ltd. v. Popke, 1995 CanLII 2591 (BC SC)).