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Non-Permitted Encumbrances

Some examples of non-permitted encumbrances include but are not limited to, Mortgages and other Financial Encumbrances, Certificates of lis pendens, Writs and Court Orders, Caveats, Builders’ Liens, etc.  Here is a brief overview of each, but keep in mind that this is not an exhaustive list.  For more information about other non-permitted encumbrances, consult with our Alberta Real estate Lawyers at the Edmonton Law Office.

  • Mortgages and other financial encumbrances. It goes without saying that a buyer almost always does not want to purchase a property that is encumbered by the seller’s mortgage.  In other words, the buyer doesn’t want to buy a home that is not given to him/her free and clear of all financial encumbrances which would include the seller’s mortgage. As a result, mortgages and other financial encumbrances must be discharged by the seller (or the seller’s lawyer) at the time of possession or within a reasonable time thereafter.
  • Certificates of Lis Pendens – In certain circumstances, a third party who is engaged in a lawsuit against the homeowner will register a Certificate of Lis Pendens against the subject property. The Certificate of Lis Pendens is a warning to any potential purchasers, lenders, etc, that a lawsuit has been commenced or is actively being pursued that could potentially affect this property.  These are most often seen when a homeowner is going through a divorce/separation and the other spouse has secured their interest in the property by letting any potential buyers know that he/she is making a claim to this home.  If a buyer purchases this property with the Certificate of Lis Pendens attached, the buyer’s claim is subject to the other spouse’s claim which would have priority over the buyer’s interest.  Unless the seller’s lawyer has promised/undertaken to have this Certificate of Lis Pendens discharged, the property should not be purchased by the buyer and the seller should not be making representations that they have the legal ability/authority to sell the property free and clear of all non-financial encumbrances.  A Certificate of Lis Pendens does not guarantee that the party registering it has an actual claim to the property; this is still to be determined by a court or some other governing body.  However, it is a fair warning to the buyer.
  • Writs of Enforcement and Court Orders – Similar to a Certificate of Lis Pendens, these types of encumbrances are secured against land/property (both real estate and personal property at the personal property registry) so that a potential purchase is made aware that the homeowner was subject to a lawsuit and a judgment or order was made against the homeowner. In order to enforce a judgement against the homeowner’s property, either the Court Order or Judgment will direct that the Order or Judgment itself is to be registered against the Certificate of Title or a Writ of Enforcement (another court document permitting enforcement of the Judgment) is subsequently registered against the Certificate of Title to the property/land.  Again, unless the seller’s lawyer has promised/undertaken to have this Writ discharged, the property should not be purchased by the buyer and the seller should not be making representations that they have the legal ability/authority to sell the property free and clear of all non-financial encumbrances.
  • Caveats – Caveats are similar to Certificates of Lis Pendens in that they are providing the buyer a warning that a third party has a potential claim to all or part of the subject property. In fact, the word “Caveat” is a Latin term that means “let him beware”.  One important difference between a Certificate of Lis Pendens and a Caveat is that in order for a Caveat to be registered against the Certificate of Title to the property, an agreement must be in place outlining that the person registering the caveat has an interest in the property itself (for example, similar to a buyer or owner) and that the claim is founded on certain grounds (for example, pursuant to an agreement).  Alternatively, a statutory provision must permit registration of a caveat against certain land/property.  The Alberta Government and Alberta Land Titles Office defines a caveat as being

    “… a notice to a claim of interest in land.  The validity of the claim is disputed in court.  If the courts agree that the claim is valid, then any person dealing with that land going forward will be subject to the interest claimed in the caveat.” see - Register a land title document or plan | Alberta.ca

    To have a better understanding of any of the different types of caveats that may affect your land or the land which you wish to purchase, please contact one of our experienced Real Estate Lawyers in Edmonton, Alberta.  The following are examples of acceptable Caveats and are provided by the Alberta Government and the Alberta Land Titles Procedure (CAV-1) Manual issued January 1, 2021.

    • equitable mortgagee or encumbrancee pursuant to an unregistered mortgage, debenture, encumbrance or floating charge
    • equitable mortgagee pursuant to a hypothecation agreement
    • charge for real estate commission pursuant to a listing agreement which expressly charges the land;
    • charge against the land pursuant to an agreement or statutory provision (e.g., unpaid condominium fees);
    • equitable mortgagee pursuant to a mortgage of a mortgage;
    • security under the Bank Act;
    • charge by virtue of an unpaid vendor's lien or purchaser's lien;
    • encumbrancee pursuant to an annuity or rent charge;
    • purchaser or beneficial owner pursuant to an agreement for sale or to an assignment of an agreement for sale;
    • beneficial owner pursuant to a will, settlement or trust deed (When pursuant to a will, the caveat claim must state that the testator is deceased);
    • executor or administrator of a deceased person having an interest in the land;
    • trustee in bankruptcy pursuant to a bankruptcy receiving order or assignment in bankruptcy;
    • beneficial owner pursuant to a severance of a joint tenancy;
    • beneficial owner by virtue of adverse possession;
    • claim to beneficial ownership or a lien pursuant to section 69 of the Law of Property Act;
    • right to purchase the property pursuant to an option to purchase or a right of first refusal to acquire an interest in land;
    • leasehold interest pursuant to a lease or to an assignment or transfer of lease;
    • dower interest in homestead property;
    • rights granted under an easement, utility right of way, party wall agreement, restrictive covenant or encroachment agreement;
    • assignee or transferee of a registered or unregistered interest;
    • rights granted under an amending agreement in respect of a registered or caveatable interest;
    • priority over rights granted in another instrument or caveat pursuant to a postponement agreement;
    • assignment of rents payable pursuant to a lease of land;
    • profit à prendre (e.g., the right to take soil, gravel, timber, etc. from the land);
    • non-disturbance rights granted by a mortgagee to a lessee;
    • public utility charge which specifically charges the land;
    • an interest re: a notice of intention to sell pursuant to section 70 of the Civil Enforcement Act (Registration number of Writ of Enforcement should be shown in the claim);
    • an agreement to execute documents that affect land (e.g. lease or mortgage);
    • a caveat filed by The Public Trustee for the Province of Alberta (use document type Caveat re Public Trustee (CAVP) for registration);
    •  rights granted under a conservation easement;
    • Surface Rights Board Order See the procedure on Caveats Registered Pursuant to Statutes of Alberta other than the Land Titles Act (CAV-5) for additional caveatable interests
  • The following are examples of unacceptable Caveats and are provided by the Alberta Government and the Alberta Land Titles Procedure (CAV-1) Manual issued January 1, 2021.  To have a better understanding of any of these caveats that may affect your land or the land which you wish to purchase, please contact one of our experienced Real Estate Lawyers in Edmonton, Alberta:
    • promissory note (unless land is specifically charged in the agreement);
    • personal loan (unless land is specifically charged in the agreement);
    • builders' lien (to be registered by way of builders' lien as there is no lien unless the requirements of the Builders' Lien Act are complied with);
    • creditor pursuant to a writ of enforcement;
    • any interest in untitled land;
    • any interest in minerals registered in the name of the Crown in the right of Alberta;
    • solicitor's lien (unless land is specifically charged by agreement);
    • security interest in chattels;
    • mortgage administration agreement;
    • brokerage or appraisal agreement (unless agreement specifically charges land);
    • guarantee of mortgage (unless guarantor has paid the mortgage debt);
    • assignment of proceeds of future sale or proceeds of a mortgage (unless land is specifically charged by the agreement);
    • beneficial interest by virtue of being a limited partner;
    • interest in part of a parcel (unless it has subdivision approval or is exempt from subdivision approval);
    • participation agreement (unless an interest in land is granted under the agreement);
    • claim under the Matrimonial Property Act (to be registered by way of certificate of lis pendens);
    • development agreement (unless pursuant to a specific section of Part 17 of the Municipal Government Act or it creates an interest in land such as a charge);
    • joint venture agreement (unless an interest in the land is granted under the agreement);
    • an agreement which provides for or permits registration of a caveat (unless an interest in land is granted under the agreement);
    • undertaking not to encumber or dispose of land.
  • Builders’ Liens – Builders’ Liens are governed under the Builders’ Lien Act and were initially an attempt to assist labourers, contractors, and really anyone to collect money owing to them for some type of material or work/labour that was provided to the owner of the property, or to any third party who was providing work/labour/ materials to the owner or to a third party on behalf of the owner. The lien must be secured against the Certificate of Title within 45 days of completing the work or providing the materials (some exceptions apply which may vary the deadline to file specific liens).  The lien is then only good or valid for approximately 6 months (180 days) after it is secured against the Certificate of Title.  The party filing the Lien must, in order to maintain a claim against the property, then file a Statement of Claim and obtain a Certificate of Lis Pendens to be filed against the Certificate of Title If you are wishing to purchase a property and there is a Builders’ Lien secured against title to that property, please contact the Edmonton Law Office so that we can assist with navigating through this issue.
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