Land ownership is a cornerstone of modern legal rights. With its capacity to generate income for farmers and landlords and serve as dwelling spaces for owners and tenants, land stands as a valuable and limited resource. As such, ensuring a definitive ownership structure is crucial. To ensure a clear ownership history and perseverance of legal rights, Ontario boasts one of the world’s most sophisticated land registration systems. The advanced nature of Ontario’s land registration framework underscores its commitment to a transparent and efficient property ownership landscape. This blog will provide an overview of this system and what it means for landowners in Ontario.
The overall purpose of a land registration system is to record the interests that parties (whether they be individuals or other legal entities, such as a corporation) have in the land. It enables documentation of the priorities of these interests and what encumbrances may exist on the land. It also includes important additional information, such as when a property is subject to an easement or a subdivision agreement.
Ontario has two land registration systems: the registry system, governed by the Registry Act, and the land titles system, governed by the Land Titles Act. The primary difference is that the registry system relies on a chain of deeds for proof of ownership, and the land titles registration system issues a government-backed title certificate, offering a more conclusive and guaranteed form of ownership.
Special consideration must be given to each system and the information they contain when performing title searches and examining the priority of interests on the land.
The Registry Act allows for a broad range of instruments to be registered in the registry system: “every instrument where be transferred, disposed of, charged, encumbered or affected in any other way.” As such, any Crown grant, deed, conveyance, mortgage, assignment of mortgage, assurance, lease, release, discharge, and agreement for sale and purchase of land can be registered.
The effect of registering an instrument in the system “constitutes notice of the instrument.” This means that the document has been officially recorded and registered in the registry system, which serves only as notice of the interest or encumbrance. The specifics of the interest are contained within the document.
The instrument is considered registered when the registrar has accepted the documents for registration. The priority of the interest under this system is given by the priority of registration unless there has been “actual notice of the prior instrument by the person claiming under the prior registration.” The priority of registration is critical – if property is disposed of to two different people, the Registry Act stipulates that the individual who registers the instrument first will have priority. Accordingly, this can have significant consequences for any individual who does not register their instrument.
The land titles system confirms ownership of property at a particular time. Unlike the registry system, it does not define an “instrument.”
The effect of registration in this system has a different consequence than the registry system. When an instrument is registered, the registrar “rules off” the previous instrument, disposing of the same interest. The parcel registrar will display the last registered instrument for the property. This system allows the lawyer to avoid examining the “ruled off” instrument when completing a title search.
Similar to the registry system, no instrument is registered unless “certified” by the registrar. The priority of interests is also given by the priority of registration.
Although the land title system may seem the more intuitive choice when completing research on land interests in a property, it is important to check both. For example:
- Ownership Information
The land titles system is a more efficient snapshot of the land’s ownership due to the “ruling off” mechanism. It is also certified by the Ontario government. However, determining the existence of any complex historical rights can only be done through the registry system, which could reveal nuances such as historical uses and changes in property boundaries.
- Transaction Details
The land titles system can be used to confirm that the current owners have correctly attained their right to the land from a previous instrument. This serves as an important due diligence check. Still, it does not contain a detailed history of transactions, which can track the history of property transfers to ensure no adverse land uses that could affect property value in the future.
- Indefeasibility of Title
The relative weakness of the registry system lies in the principle of indefeasibility of title, meaning that once a person is registered as the owner, their title is generally considered valid and immune to most claims that are not noted on the title certificate. Even so, the registry system may reveal the identity of any parties making (or having the potential to make) such a claim.
The registry system and the land titles system serve different needs, but together they provide a complete picture of the property’s ownership history, identify any potential risks, and ensure a comprehensive understanding of the rights and interests associated with the land.
The experienced real estate lawyers at Bader Law regularly represent and advise individual and corporate buyers across Mississauga and the Greater Toronto Area in real estate transactions. Our experienced real estate team takes strategic action to reduce financial risk, secure clients’ interests, and protect their significant investments in order to minimize the risk of disputes and litigation. We frequently review Agreements of Purchase and Sale, handle title insurance matters, and assist clients with mortgages and refinancing. To speak with a member of our team and learn how we can help you schedule a consultation, contact us online or call 289-652-9092.