Estate Litigation and Employment lawyer Reshma Kishnani's article "Whoops! Forgot to register transfer of title prior to death" was published in The Lawyer's Daily. The article discusses whether legal title to real property can transfer after the transfer is executed but before it is registered looking at the recent decision in Alberta of Chan v. Chan, (2022) ABQB 256.
The article was originally published on August 22, 2022. To read it in The Lawyer's Daily, part of LexisNexis Canada Inc., visit: https://www.thelawyersdaily.ca/articles/39046/whoops-forgot-to-register-transfer-of-title-prior-to-death (subscription required).
Whoops! Forgot to register transfer of title prior to death
Chan v. Chan, (2022) ABQB 256, is a case in which the issue raised was whether legal title to real property can transfer after the transfer is executed but before it is registered. Justice Grant S. Dunlop of the Court of Queen’s Bench of Alberta ruled it does not.
The court noted that while someone may have an equitable interest in the property after a transfer is executed but not registered, it does not transfer legal title or ownership of the property to them. In this case, a mother (now deceased), executed a transfer of her legal title to her property to her adult son for no consideration, seven months prior to her death. The transfer was not registered on title prior to the deceased’s death. The deceased’s son caused to register the transfer document after the deceased’s death, stating that neither he nor his mother knew the transfer was to be registered. Justice Dunlop noted in the decision that he informed the respondent son that: “Everyone is bound by the law, whether they know what the law is or not.”
The daughters of the deceased brought an application for a declaration that the deceased’s property formed part of her estate. The court granted the application for the simple reason that the transfer executed by the deceased did not transfer ownership of the property to her son while it remained unregistered. The Land Titles Act, RSC 2000, c. L-4, s.53, similar in Ontario, requires the transfer to be registered. Justice Dunlop acknowledged that the deceased’s son may have had an equitable interest in the property after the transfer was executed by the deceased, but it was not possible to determine the same on the record before the court and consideration of the totality of the circumstances was required, including with respect to issues of capacity, undue influence and resulting trust.
The decision highlights the importance of ensuring that if a testator truly intended to transfer their real property to their adult child for no or minimal consideration, prior to their death and contrary to any expressed wishes in their will, it is essential for those intentions to be acted upon in accordance with applicable laws (ie: if the transfer document was executed it should have been registered on title at the time with a notation on the transfer that it was intended to be a gift) and clearly documented in writing by the testator or the testator’s lawyer.
In light of the fact that the transfer was executed for no consideration without any indication on the transfer document that it was intended to be a gift or other evidence of the same, if the transfer had been registered on title, the deceased’s son would still have had the onus of displacing the presumption of resulting trust with respect to the property. This is an issue that often arises in estate litigation matters which requires the analysis of a testator’s intentions and the circumstances surrounding the transfer of property by a parent to their adult child. Absent documentary evidence of the parent’s intentions, the evidentiary threshold for rebutting the presumption of a resulting trust can be quite high.
It is unclear on the face of this decision whether the deceased and her son obtained any legal advice prior to executing the transfer document. It would be reasonable to expect that if counsel were retained by the deceased and it was truly her intention to transfer legal title of her property to her adult son prior to her death as a gift, the transfer would have been registered on title, the lawyer would have confirmed the deceased’s intentions with respect to the gift and made notes about her capacity to give such instructions, if applicable.
It is recommended that testators seek legal advice when making a transfer of their property, either into joint or absolute ownership, with an adult child or children for no or minimal consideration, to ensure their intentions are documented clearly and to avoid potential costly litigation.
Re-printed with permission from The Lawyer's Daily (www.thelawyersdaily.ca), part of LexisNexis Canada Inc. - originally published on August 22, 2022.
If you have any concerns or questions regarding estate litigation contact Reshma Kishnani at rkishnani@mindengross.com.