Understanding what a Certificate of Pending Litigation is, is necessary for anyone who needs to protect their property from sale or any action that might be against their interests.
In this article, we define a certificate of pending litigation (CPL).
In addition, the article gives an overview of how to acquire and cancel a certificate of pending litigation.
By the end of the article, as a reader, you will be able to understand the concept of a certificate of pending litigation and how it is acquired and revoked.
What is a Certificate of Pending Litigation
A certificate of pending litigation is used to stop interested parties from claiming an interest in your property.
In such cases, the ownership of a property could be in dispute in court.
Thus, acquiring a CPL will inform the public that such a property is the subject of a legal dispute in court.
A certificate of pending litigation is a formal document authorized by the court on behalf of a party asserting an interest in a specific piece of land.
Purpose of a Certificate of Pending Litigation
The purpose of a CPL is to confirm the ongoing resolution of a legal dispute within the judicial system.
Consequently, this certificate serves as a universal notification that the lawful or beneficial ownership of the said property is under dispute.
It is worth noting that a certificate of pending litigation does not inherently inhibit the alteration or actual transfer of property ownership.
However, any such transfer or alteration is subject to the outcome of the pending court process.
In a case where the owner wins the court battle, any person who purchased from the adverse party stands to lose money.
In simpler terms, purchasing a property with an active CPL could jeopardize your ownership rights should the court rule in favor of the certificate of pending litigation claimant.
Importantly, a CPL is strictly not intended to function as a pre-judgment execution tool in financial claim suits.
For example, if you need to get a loan with a piece of land as security, a certificate of pending litigation cannot be used to prove that you are the owner of the piece of land.
Utilizing a certificate of pending litigation as leverage to advance a financial claim is improper and inappropriate.
The certificate of pending litigation’s sole purpose lies in safeguarding a legitimate interest in land until the underlying dispute is resolved.
Acquiring a Certificate of Pending Litigation
The option to file a CPL is available to anyone who has initiated or is a party to a legal proceeding for a disputed piece of land.
To obtain a certificate of pending litigation, one should bring a motion before the courts.
This motion can either be made with or without notice to the other party.
Therefore, to acquire a CPL, you must petition the court for an order granting authorization for its registration.
The major requirement that one needs to present to the court
- A claim of an interest in land
- A claim of a right of action in respect of land
- Be dealing with one of the items set out in Section 215 of the Land Title Act (Canada)
The court will assess multiple factors before granting this order. These factors encompass:
- The nature and validity of your claim to an interest in the land.
- The balance between convenience and hardship for both parties
- The availability and sufficiency of alternative remedies
- The risk of irreversible harm or prejudice without the order’s issuance
- The potential for injustice or misuse of the legal process if the order is approved
Upon securing the court’s order, you must file it alongside your certificate of pending litigation with the Registrar of Land Titles.
Subsequently, the Registrar will record your CPL on the property’s title.
Once registered, this certificate of pending litigation operates as a public notice for anyone conducting a title search that a pending legal dispute affects the property.
Cancelling a Certificate of Pending Litigation
Cancellation of a certificate of pending litigation can be pursued through various means:
- Submitting an application to the court under Section 215 of the Land Title Act if the certificate of pending litigation filer lacked the authority to register it.
- If the provided pleadings are insufficient, the court can promptly order the cancellation of the CPL.
- Approaching the Registrar of Land Titles under Section 254 of the Land Title Act 30 days after the court’s dismissal or discontinuation of the relevant claim.
- Acquiring written consent from the certificate filer or their legal representative to void the certificate.
- Depositing an amount with the court sufficient to settle the claim or providing court-ordered security for the claim.
Challenging a Certificate of Pending Litigation
It is possible to challenge a certificate of pending litigation.
For example, where the certificate affects your property.
To challenge a CPL one needs to seek a court order for its annulment or discharge.
If a challenge is successful, one may also pursue damages or costs from the certificate filer.
However, to initiate a challenge against a CPL, one must establish:
- Wrongful Registration. Here, the party lacked a valid claim to an interest in the land or a legal right of action regarding the land.
- The certificate filer failed to obtain a proper court order to register the certificate of pending litigation.
- The acquisition violated the rules and procedures governing the submission of the application.
- Evidence of bad faith and misuse of the legal process.
- The certificate of pending litigation filer’s actions resulted in undue hardship, inconvenience, or loss for you.
Frequently Asked Questions
Who can request a CPL?
Any party to a litigation procedure has the right to request this certificate.
This includes individuals with an interest in land or those granted a legal right of action by relevant legislation.
For example, if you’ve entered into a contract for property purchase or sale and the other party breaches the contract terms, you can submit a certificate of pending litigation to safeguard your stake in the property until the breach is rectified or compensated.
What are some of the grounds that can bring about a legal dispute
Some reasonable claims that a party may have an interest in land, amongst other things, are as follows:
- An Agreement of Purchase and Sale;
- Family law claims;
- Fraudulent conveyances; or
- Interest in mortgage.
What are the grounds the court can use when determining whether to discharge a certificate of pending litigation?
The case Ontario Inc. v Dhunna, 1987 CarswellOnt 551 gave out the following as grounds for discharging the certificate of pending litigation:
- Whether the plaintiff is a shell corporation;
- The intent of the parties in acquiring the land;
- Whether the land is unique;
- The ease or difficulty in calculating damages;
- Whether damages would be a satisfactory remedy;
- The presence or absence of a willing purchaser; and
- Whether there is an alternative claim for damages;
- The harm to each party where the court does not cancel the certificate of pending litigation.
When Challenging a Certificate of pending litigation what are some of the bad faith claims
Some of the grounds to prove bad faith include
- Malicious intention
- Frivolous and vexatious grounds
- Unreasonable grounds
Conclusion
A CPL wields significant influence as a tool to shield your interest in property that is the subject of a legal dispute.
Yet, it can also introduce complications and costs if you find yourself on its receiving end.
Thus, comprehending the essence of a CPL, its procurement, nullification, and challenges, along with the ramifications of a CPL’s registration on your property, assumes paramount importance.
If any queries or apprehensions about CPLs arise, consult an attorney versed in the matter.