A title search is conducted during the process of selling or purchasing or acquiring an interest in a property. Its purpose is to find out:
- If the seller’s interest in the property is saleable;
- If there is any right of way or things like that (known as easements) in the property; and
- If the property is mortgaged, encumbered, or there are back taxes to be paid, called liens thereon.
It is also necessary to frame the legal description of the property usually written in the beginning of the agreement of purchase and sale. Such details can be obtained from the land registry office or the seller’s lawyer or from an assessment department like MCAP and so on. The point is that such information is available to the public, but the processing of the information to prepare the necessary documents in question should be done by a lawyer. Incidentally, any error in the legal description may lead to complications later in the future.
Older Registry Act and the 40-year rule
For land not yet converted to our newer Land Titles system (guaranteed electronic records), the title searching requirements fall under the older Registry regime in our land registry offices across the province of Ontario (although can still be viewed electronically, it is still the scanned-in documents of the older paper/book form system). Hence, under the Registry regime it is necessary to search title for the last 40 years. Section 112 (1) of the Registry Act says, “A person dealing with land shall not be required to show that the person is lawfully entitled to the land as owner thereof through a good and sufficient chain of title during a period greater than the forty years immediately preceding the day of such dealing, except in respect of a claim referred to in s. 113(5)”. Generally, the first deed registered after the commencement date of search is called the root of title, and the subsequent titles are known to form a chain. The period prior to the commencement date should under certain conditions be also reviewed in order to avoid fraudulent deals. There are some specific points, which are required to be looked into, like deed/transfers of land, land of a deceased, deposits (of documents) on title, adjacent lands, encroachments and spousal interest.
New Land Titles
Should a search be required under the Land Titles Act, then although the most recent search is a guaranteed portrayal of the state of the property/land at that given point in time, other searches should be conducted. The additional searches arising out of this process apply to both Land Titles and Registry lands/properties. These searches are: Crown Claims and Patents, corporate searches and their owners, executions of past awards/judgements, municipal obligations like one-foot reserves, off-title security/financing arrangements such as PPSA loans and mortgages of land, rights of way, and Planning Act violations.
Normally, the ways by which land is divided come under the purview of the Planning Act. Any violation of its provisions is a serious offence and could lead to dispossession. This in turn causes a break in the whole chain of title. The basic principle is given in Section 50 of the Planning Act which says that a person is prohibited from sale, transfer or mortgage (and the constructive equivocal act or acts thereof such as really long leases) unless the person has not retained an interest in adjoining lands. For instance, let XYZ be the owner of 4 acres of land. Any deal on this land for a period over 21 years should include all the four acres. XYZ will not be in compliance with the Planning Act (i.e. legally correct) if he tries to sell 2 acres while retaining interest in the rest of the land. The reason behind the Act is that if people go on subdividing land at will, then such actions will result in a shortage of infrastructure, like schools, parks and so on. Having regard to this rule, it is essential that a search is carried out to ensure that the land for sale was not under common ownership with the lands adjoining it at any time prior.
A very important exception to the aforesaid rule of the Planning Act is that all violations before June 15th, 1967 are not taken into consideration. It follows therefore that any search preceding that date is not required.
Title Abstract or Parcel Register review by a lawyer
As stated earlier, the search process should conclude with a lawyer reviewing all searched documents and the abstract/parcel register thereof. This abstract/parcel register not only provides a summary, but also guidance should there be a transaction in the future. This will be possible if the documents are kept in a safe and secure manner. It is also necessary to ensure that there have been no further registrations in the interim period between the original search and the date of registration of the agreement or transfer of title or as agreed to in the agreement of purchase and sale. In conclusion, a list of documents to be reviewed or procured as recommended by the Law Society of Upper Canada in a title search should be requested of your lawyer with every new purchase of real estate. A glossary of the typical terms used in a title search is as follows:
- Conveyancer – A legal expert specializing in sales, etc… of land and properties.
- Legal Instrument – A formally written document attributable formally to an author, which is enforceable by law, such as a deed.
- Plan – A blueprint, drawing, sketch or survey map, which forms a part of the legal description.
- Abstracts – Copies of all documents affecting the title.
- Chain – The names of all title holders in the past 40 years or a sheriff’s certificate in the matter.
Remember, your real estate property is only as good and marketable as its title. Real estate can be appraised at millions but be worthless in value given the amount of encumbrances registered on title prior to it being transferred to you in a purchase and sale transaction. Contact the lawyers at Levy Zavet PC not only to assist you in the purchase of real estate but also in the marketability and sale/transfer/lease of your real estate building, house or land; in whole or in part.