Real Estate Law Blog

Bad actors can effect a transfer or mortgage of land without the knowledge or authorization of the registered owner.

Title fraud can befall homeowners as well as owners of commercial or investment property, such as where a scam or rogue director purports to deal in land without bona fide authorization of the full board. For example, in 1264777 B.C. Ltd. v Gill, 2023 BCSC 131 (appeal dismissed in 2023 BCCA 410), the owner presented evidence that fraudsters unlawfully accessed and made changes to the public corporate records of a corporate landowner, which enabled the property to become encumbered by a fraudulent mortgage.

This article outlines two possible strategies for an owner to defend against a threat of an unauthorized transfer or mortgage of land in B.C. by prohibiting their registration: lodging a caveat, and withdrawing a certificate of duplicate indefeasible title.

Caveat

Under section 283 of the Land Title Act (British Columbia), a registered owner of land in B.C. who provides evidence that:

1. an instrument properly executed by it is no longer valid or operative, or
2. an instrument not properly or validly executed by it might be or has been tendered for registration,

may, if accepted by the registrar, lodge a caveat against the land such that a disposition of the land or a charge, either generally or as specifically expressed in the caveat, must not be registered unless the registered owner gives its consent, or the person claiming an interest under the instrument establishes its title in court. Accordingly, a caveat cannot be used as a precautionary measure where no threat exists: the owner has to learn of a potential unauthorized transfer or charge before it is fully registered.

Once lodged, a caveat will appear as a notation on title in a similar way as a mortgage or other charge.

As long as the caveat remains in force, the registrar is not permitted to register another instrument affecting the land charged by it, unless expressed to be subject to the caveator’s claim, or deposit a plan of subdivision or allow any change in the boundaries affecting such land unless consented to by the caveator, and in that sense, the caveat “freezes” title.

An advantage of lodging a caveat is speed. Once evidence is assembled and materials are prepared, if the application is accepted by the registrar, a caveat can be lodged with the registrar and appear on title as early as the same day of filing, unlike most land title applications which can take around two weeks or more (depending on the volume of applications being processed by the registrar at any given time).

There can be disadvantages to applying for a caveat, depending on the circumstances:

• The registered owner must be able to submit evidence of the facts under either (a) or (b) above, which may be difficult to establish.
• A caveat will lapse 2 months after it is lodged with the registrar, unless the caveator commences an action to establish its title to the estate or interest claimed, and registers a certificate of pending litigation against the land. That increases cost if a long-term solution is needed.
• A caveat can also cease to affect a person claiming an estate or interest in land or a charge, known as a ‘caveatee’, if the caveatee serves, at least 21 days before 2 months have elapsed since lodging, notice on the caveator to withdraw the caveat or take action to establish its claim.
• If a registered owner wrongfully and without reasonable cause lodges a caveat with the registrar, it can become liable to pay a person who sustains damages.

In order to learn of unexpected applications for registration on its title, an owner can, directly or through its counsel, order a parcel activity notifier through the Land Title Survey Authority to get an alert whenever pending activity affects the parcel, including pending applications to register a transfer of land or mortgage.

Certificate of Duplicate Indefeasible Title

Under Section 176 of the Land Title Act (British Columbia), a registered owner of land in B.C. that is not subject to a registered mortgage or agreement for sale can apply to the registrar for the issuance of a certificate of duplicate indefeasible title.

Once the duplicate indefeasible title is withdrawn, the registrar will not accept for registration a transfer of the land or mortgage or agreement of sale until the duplicate indefeasible title is surrendered to the registrar for cancellation. A notation appears at the end of the title search and sets out to whom duplicate indefeasible title is issued.

There are advantages to obtaining a certificate of duplicate indefeasible title, if the applicant qualifies:

• The application is relatively simple and low-cost.
• An owner need not provide evidence of, or even apprehend, a threat of an unauthorized transfer or mortgage to apply.
• The effect of the issuance of a certificate of duplicate indefeasible title endures until it is surrendered to the registrar for cancellation.

Some potential drawbacks of obtaining a certificate of duplicate indefeasible title include the following:

• To withdraw a certificate of duplicate indefeasible title, title cannot be subject to a registered mortgage, which could disqualify many interested applicants.
• The application is processed in the same priority as most other land title applications, which can, depending on volume at any given time, take around 2 weeks or more to process. If an application for registration of an unauthorized transfer or mortgage has already been submitted to the Land Title Office, it may be too late to apply. If no such application has yet been made however, typical land title procedure would require the application for the certificate of duplicate indefeasible title and the application to register a transfer or mortgage to be processed in the order received.
• If the duplicate indefeasible title is lost or destroyed, it can be a lengthy and costly process to get a replacement, and could hold up a sale or financing transaction.

If an owner of land in B.C. becomes aware of a potential unauthorized transaction relating to that land, it can consider these strategies with our Real Estate team to defend and protect its title.