Real Property, Legal Title, Equitable Title and the Torrens System: Presumptions as to Ownership
Real property ownership in British Columbia is governed by a modified Torrens system for title registration. S. 23(2) of Part 3 of the Land Title Act provides that the registered title for a property in the Land Title Office is conclusive evidence at law and equity as to who the registered owner(s) of a property is(are). This section can be problematic when the ownership reflected in a property’s title does not reflect the reality of ownership between the owners on title.
Significant issues can and do arise when parties do not register their interest in a property in the Land Title Office or do not properly document ownership interests that are not reflected on title. The recent case of Brar v. Gill, 2017 BCSC 186 (CanLII) is illustrative of issue that may be encountered if parties do not keep the effect of the Land Title Act in mind.
In Brar, disputes arose between the parties over a number of interrelated transactions. At the heart of the litigation was the allegation by the defendants that the plaintiff was registered on title to the subject property only for the purpose of securing financing and that she had no beneficial interest in the property. The plaintiff denied that she held an interest in the property for the benefit of the defendants, denied she owed the defendants money and that her being on title reflected the contributions that she made to the purchase of the property.
What appears clear from the case was that there was significant intermingling of the parties funds through a whole series of transactions and that there was substantial evidentiary issues concerning the proof of such transactions.
The Court held that the Land Title Act creates a presumption that the registered title reflects ownership and that that presumption can only be rebutted in limited circumstances. The defendants were unable to produce convincing and consistent evidence that the plaintiff’s interest in the property was gratuitously transferred to her by the defendants; rather, the evidence tended to support the notion that the plaintiff assisted with the down payment and was entitled to an interest in the property as a result.
The defendants lead inconsistent and unconvincing evidence that they had no knowledge that the plaintiff was registered on title.
In the end, the Court found that the plaintiff was entitled to one-third of the net sale proceeds of the property after accounting for the pay down of the mortgage debt.
Brar is illustrative of the risk that parties take in failing to document and record agreements with respect to ownership and contributions to ownership of a property especially were funds advanced for the purchase of a property are intermingled with a number of other transactions between the parties. Even though parties may intend otherwise, the ownership interest on title is presumed to represent reality unless substantial and well-documents proof can be provided to rebut this presumption.
It is not uncommon for parties to put someone on title to assist with guaranteeing a mortgage, to secure financing, in an attempt to avoid property transfer tax or for any number of reasons. That said, the failure to properly document the underlying intentions and transactions of the parties can occasion unanticipated results when co-owners find themselves in the midst of a dispute. Parties are well advised to seek timely and competent legal advice before considering co-ownership or adding someone to the title of their property(ies).
If you are in the midst of a dispute concerning the ownership of a property, please do not hesitate to contact me via 1-800-558-1155 or at firstname.lastname@example.org or any of our commercial litigators. If you are considering joint ownership or otherwise need assistance in documenting and completing a financial transaction involving property, please do not hesitate to contact our Real Estate group.
Jeremy Burgess is a litigation associate at Pushor Mitchell who frequently assists clients in builders lien and construction disputes. If you have any questions about builders liens or construction disputes, we’d be happy to assist you. Feel free to contact Jeremy in a confidential manner toll free at 1-800-558-1155 or at email@example.com. You may also contact our litigation group.
The foregoing is for informational purposes only and is not legal advice, nor should be construed as such.