Our client was selling his condo, closing on January 6, 2023. We looked at the title and saw a writ of execution (writ) in the pending registration queue. A writ means that someone has sued the seller and obtained a judgment. In this case, judgment for $30,000 was sent in for Land Titles registration in mid-September 2022.
Our seller was only going to net $10,000 after payment of the mortgage, real estate commission and legal fees. They would be short $20,000 to pay out the writ. The seller can’t close; this deal could be dead!
We spoke to the realtor who discovered the writ during the listing process. The realtor asked the seller about the writ. The seller said he was working with a bankruptcy trustee on a consumer proposal that would deal with the writ.
The realtor didn’t follow up on what the consumer proposal would do or when. He mistakenly interpreted the seller’s words to mean that the writ wasn’t an issue. He didn’t understand that because the writ was registered against the title, the seller would have to clear it off, just like they have to pay out and clear off their old mortgage.
The sale was in limbo while we negotiated with the writ holder’s lawyer. The seller was distraught because it looked like they would get absolutely nothing from the sale of the condo.
LESSONS LEARNED
- Getting a title during the listing stage or if you have a serious buyer ready to make an offer is standard practice. READ that title!
- If there is anything odd already registered against the title or in the pending registration queue, such as a writ, builders’ lien, certificate of lis pendens (lawsuit pending) order or notice (and there could be others), you have to take action. It’s not your job to solve the problem, but it is your job to recognize the potential problem. If there isn’t a clear solution, you have a team. Call us or another assigned lawyer and start the discussion. If you can’t find out about the registration in the pending registration queue, have a seller’s condition or don’t enter into the deal.
- Make that call early in the process. Solving these problems takes time, and nobody wants them to come up in the week before closing.
Protect yourself.
Cheers,
Barry
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