Who can help you
Our BC Notaries would be happy to help you review your title search:
Our BC Lawyers would be happy to help you with your estate planning needs, including trusts:
Great! You’ve made an offer on a home! Now what?
There are several kinds of investigations you can do of the physical property, like home inspections or getting a survey done, but how do you find out about the legal standing of the property?
That’s where we come in. We will help you do certain kinds of searches that will give you information about the property, like a title search, tax and utilities searches.
This article is about title searches, and a few of the many things they can tell you about the property.
What is a title search?
In BC, a title search shows you (among other things) the various rights and interests others have in this property.
There are two main parts on the title search that show these rights and interests: Legal Notations, and Charges, Liens and Interests.
The section called Legal Notations contains notes or alerts about issues that could affect your property – for example, if your property uses geothermal energy, and the strata hasn’t finished paying for the geothermal equipment, you might see notation that says there is a charge affecting this property in the Personal Property Security Registry.
If the property was in an Agricultural Land Reserve (usually meaning the property has been protected for some kind of farming purposes), you might see a notation that the property is subject to the Agricultural Land Commission Act.
If the property is in the flight path of an airport, you might see a charge that says the property is subject to the Aeronautics Act.
Charges, Liens and Interests
The section called Charges, Liens and Interests will show the interests which other people, governments, utilities or other organizations have in your property.
For example, if a previous owner promised to allow a neighbour to walk across this property so they can access water, or a road, then you might see a Right of Way registered on title.
When a developer is subdividing property, they might put a Building Scheme on title to the property, setting out the characteristics and building requirements of the properties in that subdivision.
If a previous owner had gotten involved in a law suit, and lost, the winner of that law suit might have registered a Judgment against title to the property.
This list goes on and on and on!
Title searches show summaries, not details
Think of a title search like looking at table of contents in a book – you can see the list of chapters in the book, and those titles might give you a little clue about what the content of those chapters might be, but until you actually open up the chapter itself and read it, you won’t know what it really says.
Each notation or charge registered on title to a property is like a chapter in that book – until you actually order a copy of the notation or charge from the Land Title Office, and read the whole thing (and any supporting documentation that comes with it), you won’t know what kind of terms or restrictions the charge contains.
Clients often ask “can’t you tell from the name of the charge what it’s about?”. Sort of. Maybe. But do you really want to trust such a big investment to a maybe? Sometimes words can be misleading, so it’s important to actually order copies of these charges from the Land Title Office when you’re not sure.
Doing your due diligence
We have a “buyer beware” system in BC, so it’s important that you take some time to actually go through your title search, and investigate the legal notations and charges registered against the property you want to buy, and what they might mean to you.
This research is called due diligence – you need to spend an appropriate amount of time investigating the legal and financial consequences of buying this particular property.
The idea is that you are supposed to ask all of your important questions about what you can do with and on the property (and what kinds of restrictions are involved) before you actually enter into a binding contract to purchase it.
If you want to build a pool, or a deck on the property… can you? Can you put that carriage house in the back? Or knock down those trees impeding your view? Why is your neighbour walking across your back yard to get to the beach? Why can’t you use cedar trees in your landscaping?
If you don’t do an appropriate amount or type of due diligence, it makes it harder for you to say “this isn’t what I thought I was buying” after the deal is done. You don’t get to buy a property that has a charge on title saying “your neighbour gets to use part of your property as their driveway”, and then complain two weeks after closing that they’re using part of your property as a driveway!
Why do I care?
You care about these rights and interests because they can affect the use or value of the property.
For example, that covenant registered on the property might say that your property is in a floodplain, and now that you have been notified of that fact, bar you from suing the chargeholder for damage done during a flood. If you know this, will your insurance company still give you insurance?
That right-of-way might say you have to keep a certain part of the property free of trees and other landscaping, so people can drive over it. So that pool you wanted to build in the back yard? Not going to happen.
A building scheme might say you can’t run a business out of your home, or that you can’t keep certain kinds of animals on the property.
Each of these items could cost you money, or stop you from using the property in the way you wanted to.
Which charges will stay after completion? Which will go?
A good REALTOR® will review the title search for the property with you before you sign your contract of purchase and sale. They will also recommend including a “subject to” clause that gives you time to review the title with a BC Notary or a lawyer. This is an important step in your due diligence process.
If you have a “subject to” clause in your contract that gives you time to review the title to the property with a BC Notary or lawyer, remember that you need to make best efforts to actually do that – don’t assume the title search review is just a routine part of every contract, or that you will be able to deal with it when you are signing your conveyancing documents. Make best efforts to review the title search with your BC Notary or lawyer before you waive or fulfill that condition.
Your contract of purchase and sale tells us which charges are going to stay on title after you become owner, and which are to go away. The seller’s mortgage, for example, will go away, because you have asked the seller to provide you with “clear title”. But certain other charges will stay, and so it’s important to know which are which.
If you are using a BC Realtor, they will use a form of Contract of Purchase and sale that has the following paragraph in it:
9. TITLE: Free and clear of all encumbrances except subsisting conditions, provisos, restrictions, exceptions and reservations, including royalties, contained in the original grant or contained in any other grant or disposition from the Crown, registered or pending restrictive covenants and rights-of-way in favour of utilities and public authorities, existing tenancies set out in Section 5, if any, and except as otherwise set out herein.
If the title to this property has any of these items on it, then those items will stay on title after you have bought the place, unless you have specifically identified a charge as having to be removed. It’s important to remember that these charges are very specific – a building scheme, for example, does NOT fall into this list of charges!
When you are buying a property, take the time to get and review a copy of the title search. It will show you a lot of useful information. If you don’t know what the notations or charges are on the title, ask questions.
Your Realtor, BC Notary or Lawyer will be able to help you interpret what you see. And if you need to ask questions about a particular notation or charge, or its terms, you can order a copy of that notation or charge from the Land Title Office. It’s a crucial step in your due diligence process. Don’t “yeah, yeah” right past it!
Tags: charges, conveyancing, covenants, mortgage, real property, rights of way, title search