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INDEFEASIBLE TITLE

by Mary MacGregor

written 1996, published in Beef in B.C. Oct 96

When you buy land in British Columbia, you or your lawyer files a “Freehold Transfer” at the Land Title Office, and the Land Title Office then issues you a “Certificate of Indefeasible Title”. Sounds grand—“indefeasible”—kind of rolls off the tongue. What does it actually mean?

It means that the Province of British Columbia guarantees your title. There are certain exceptions, and we’ll go through them. But if none of the exceptions are present, the registered owner, the person with the Certificate of Indefeasible Title, and no one else, is the true owner.

The Basic Rule.

The basic rule is in the Land Title Act, section 23. It says:

Every indefeasible title, as long as it remains in force and uncancelled, shall be conclusive evidence at law and in equity, as against the Crown and all other persons, that the person named in the title is indefeasibly entitled to an estate in fee simple to the land described in the indefeasible title…(then exceptions listed)

“An estate in fee simple” is the name that a property law lawyer gives to the maximum interest that any individual can have in land. Only the Queen (represented in Canada as to land, by the provincial governments) can have a legally greater interest in land.

The Exceptions.

The exceptions are as follows:

1. Crown Grant Exclusions. The Crown Grant is the original transfer from the Crown, back when the first person to own the property took title to it. There are often exclusions for roads and trails, or for gravel, or sometimes timber. There is often a resumption clause where the Provincial Government can take back 1/20^th of the property without compensation. The exclusions depend on government policy at the date the grant was issued. Subsequent grants enter the picture where, for example, the property went back to the Crown for unpaid taxes and a Tax Act grant was made after the original Crown Grant. The terms of the Tax Act grant then prevail. In my opinion, every rancher should have a copy of, and be familiar with the terms of his Crown Grants.
2. Federal or Provincial Tax, Rate or Assessment. These must exist as a lien, a special type of claim, at the time the property is transferred to the (current) registered owner. These Crown liens are relatively unusual. But if there is one out there, the registered owner will take title subject to the lien.
3. Municipal Charge, Rate or Assessment. Again this must exist when the property is transferred to the (current) registered owner. They can include local improvement charges becoming due after the date of the transfer.
4. Lease for Three Years or Less. The lease must be for an original term (not a remaining term) of three years, AND the tenant must be in actual occupation. But if these circumstances exist, the new title holder takes subject to the lease. If you’re buying property, better be 100% clear about the existence of any tenant.
5. A Highway or Public Right of Way, Watercourse, Right of Water or Other Public Easement. This is self explanatory. If any of these things exist on the property at the time of transfer, your title is subject to it. These are in addition to registered charges. They are unregistered interests to which your title may be subject.
6. A Right of Expropriation or Escheat under an Act. If for example the Highway Act or the Water Act provide for the expropriation of property, your indefeasible title is not enough to ward off the exercise of those rights, if they exist in statute.
7. Subsequent Charges. There are certain charges which can be filed on your title after it is registered, some of which can be filed without your agreement. They are such things as a “caution, caveat, charge, claim of builder’s lien, condition, entry, exception, judgment, notice, pending court proceeding, reservation, right of entry, transfer, or other matter noted or endorsed on the title or which may be noted or endorsed” after the date your title is registered.
8. Wrong Boundaries. Establishing your title is not a guarantee of the boundaries. There is a possibility someone can come along and show that the boundaries are incorrect. Your title is subject to this possibility.
9. Fraud. Your title is subject to fraud—but not just any fraud. To defeat your title it has to be fraud in which you have participated in some degree, no matter how minor. If the prior owner is the fraudulent person, but you bought the property as a legitimate purchaser for a proper price, then your title will be protected. If the prior owner is fraudulent and you are not a “bona fide purchaser for value”, your title will NOT be protected. For example, if someone transfers property to you without compensation, and the signature on the transfer is forged or obtained by trickery, your title will NOT be protected.
10. Restrictive Condition, Right of Reverter, or Obligation Imposed on the Land by the Forest Act, Endorsed on Title. If any of these charges exist on title, your title will naturally be subject to them.

Your title will also be subject to prior registered charges. So for example if the seller of property has a mortgage registered against it, and fails to pay it out and discharge it, your title remains subject to the mortgage.

Adverse Interests Obtained From Possession or Use.

The Land Title Act goes the distance to cancel out any unregistered interests that might, but for the Act, exist. Section 23(2) says “After an indefeasible title is registered, no title adverse to or in derogation of the title of the registered owner shall be acquired by right of possession.”. This puts an end to “squatter’s rights”.

Section 24 of the Act abolishes prescription. “Prescription” is legalese for a right over the property of another, (such as an easement) obtained by continued use over a long period of time, for example 20 years. The use has to be uncontested; if the property owner objects to the use, “prescription” doesn’t apply. Section 24 says “All existing methods of acquiring a right in or over land by prescription are abolished and, without limiting the generality of the foregoing, the common law doctrine of prescription and the doctrine of the lost modern grant are abolished.”.

The Objective of the Legislation.

The legislation has been written as it is, to create a system where the title says it all, subject only to the enumerated exceptions. The title register is supposed to be the final answer as to who has an interest in the property.

Further Protection.

Section 25 of the Act goes on to say that no one can sue a registered owner to eject him or her from the property or to recover possession of the property except for any of the exceptions under section 23 and except for:

• a foreclosing lender
• a landlord as against a defaulting tenant
• the person who was deprived of land by fraud, including forgery, but only against a registered owner who participated in the fraud (in any degree) or a person deriving his title from the owner who got title from fraud, EXCEPT for a bona fide purchaser for value
• a title holder where his title includes land because of a wrong description of boundaries
• if two titles have been registered for the same land, then the registered owner whose transfer was registered first, can sue
• the beneficiary under a trust, purchaser under an agreement for sale, or other person with a right arising or partly arising after the registration of the title.

What About Notice of an Unregistered Interest?

Section 29 of the Act says that, unless it constitutes fraud, the registered owner or person applying to become the registered owner can ignore unregistered interests of which he or she has notice.

The wording of the section is strong. Judges have watered down the strength of the section in applying it to various cases. Some of the cases suggest that any purchaser who takes title with actual notice of a prior interest or claim of interest, and who then uses section 29 to defeat that interest or claim, is automatically fraudulent.

The preferable interpretation is that of Mr. Justice Taylor in 1979 decision (Jager the Cleaner Ltd. v. Li’s Invt. Co.). He said:

A consideration of the authorities cited shows clearly that under the British Columbia land registry system a purchaser who takes with knowledge of an unregistered interest may be guilty of fraud if he were thereafter to seek protection of the Land Registry Act so as to defeat the claim of the holder of that interest. But I do not accept the proposition that this result must follow in every case so that, in effect, the courts have repealed s. [29 of the Land Title Act]. The various decisions in which it is stated, even in unqualified terms, that notice of an unregistered interest before closing bars the purchaser from protection of the Act, like all other decisions in the courts, are authorities only in relation to the facts of a particular case. While the language may in some cases be broad, I do not think that they can be said to lay down a rule of universal application. The question in every case must be whether a fraud would in fact be committed if the purchaser were to claim the protection of the Act; fraud, which is never lightly to be inferred, must, I think, be established by the particular facts of the case and cannot be presumed.

Why Is the Land Title Act Important?

Many people in the province think that their titles are at risk because of aboriginal claims.

It is important for us all to understand that current B.C. legislation vigorously protects the registered owners of indefeasible title to their land.

Are there possible challenges? Sure. The legislature could change the legislation. Aboriginal communities could start some kind of trust action. They could suggest under section 29 that we all have notice of their unregistered interest before we obtained title.

Are these challenges likely to succeed? I’ll stick my neck out and say that success is unlikely—possible, but unlikely—for a number of reasons. First, many of the registered voters in this province are land owners. Section 23 of the Land Title Act is the whole basis for our system of land ownership and fundamental to our economy. Changing the legislation will never be lightly done. I regard it as unlikely in the extreme that government will legislate to change the Act.

A claim that the existing title holder owns the property in trust for the aboriginal community which alleges some kind of previous interest in it, or a claim that title holders have had notice of alleged aboriginal title, are very difficult to prove. Under our existing law, the claims are also far too old to be presented, without special legislation or court permission. The existing cases about the effect of notice of an unregistered interest on a purchaser’s title, involve a specific interest (like a lease) in the specific property in question, of which specific notice is given to the purchaser of the property before purchase--not some broad challenge to the government’s original title.

Anybody can start an action against anybody else claiming anything. So court actions are possible. It is also possible that such an action could be successful. But I believe, and I hope, that it would not be.

The claims of aboriginal people should be settled without challenging the indefeasible titles of those who own land.