Jason Bryk 

Phone: 204.956.3510

Fax: 204.957.0227

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Discharge of a Caveat may not be Sufficient

2007


Under the Real Property Act (Manitoba) (the "MRPA"), a person claiming an estate or interest in land (and as well, an estate or interest in a mortgage, encumbrance or lease) may, provided that the land (or the mortgage, encumbrance or lease) is under the new (titled Torrens system), file a caveat (in the prescribed form) which, in effect, records "notice" of the caveator's estate or interest against the land (or against the mortgage, encumbrance or lease).  This filing, in effect, establishes the priority of the caveator's estate or interest as against other claimants or holders of estates or interests in the land (or in the mortgage, encumbrance or lease).  Please refer to Sections 148(1) and 155 of the MRPA.


It is important to appreciate that a caveat is not an interest, estate or right of or by itself alone, but is merely a notice or warning (to all interested parties) that the caveator has an interest, estate or right.  That is why Section 154(1) of the MRPA requires that a caveat sets forth "the nature and particulars of the title, estate, interest or lien, under which the claim (of which the caveat is to give notice) is made".  There is case law (from Alberta and Saskatchewan) which holds that a caveat may not bind persons acquiring estates, interests or rights in the underlying land (or mortgage, encumbrance or lease), notwithstanding the caveat's due registration, where the caveat fails to either adequately describe the particulars of the caveator's estate, interest or right claimed, or, where the caveat fails to have attached to it (in effect, as a schedule), a copy of the underlying agreement, document or instrument which creates the estate, interest or right.


The fact that a registered caveat is something separate from the underlying agreement, document or instrument creating the claimed estate, interest or right must be kept in mind by counsel when caveats are discharged.  Caveats are discharged by the registration of the discharge instrument (in the prescribed form), or (occasionally) pursuant to action taken by the Land Titles Office consequent upon an interested person initiating what is commonly called a "30 day notice proceeding" under Section 150 of the MRPA.


Where a person decides to release, terminate, or otherwise give up such person's estate, interest or right which has previously been registered by way of a caveat, he, she, it, or as the case may be, they (or more accurately, the caveator's counsel) will typically discharge the registration of the caveat and do no more.  This is based on the assumption that discharging the caveat will of itself release, terminate or otherwise give up the underlying estate, interest or right.  While for some situations, simply discharging may be sufficient, it is this writer's view that the mere discharge of the caveat will not, or at least not necessarily, legally result in the underlying estate, interest or right itself being extinguished.  This writer believes that in addition to discharging, the caveator should also provide a written (simple) confirmation (ideally, to be stated to be issued to "all interested persons") that the caveator's estate, interest or right has in fact been released, terminated or otherwise extinguished.


Absent the issuance of such written confirmation, the (former) caveator or someone claiming under or through the (former) caveator may be able to argue that the estate, interest or right continues in effect, and, that, notwithstanding the discharge of the caveat:


(i)            while the estate, interest or right is probably not enforceable against persons acquiring interests in the land after the caveat's discharge, the estate, interest or right continues to be enforceable as against the owner of the land (or of the mortgage, encumbrance or lease); and

(ii)           absent agreement to the contrary, the holder of the estate, interest or right may be entitled to register a new caveat.


Some would argue that the act of discharging a caveat should be sufficient evidence to establish that the discharging caveator has released, terminated or extinguished the caveator's estate, interest or right.  In some instances, this may be a reasonable argument, but nevertheless, given the above-described function of a caveat (ie., it doesn't create an estate, interest or right, but merely gives notice and establishes the priority of the estate, interest or right), it would be far safer (from the perspective of someone who wants to ensure that the estate, interest or right is in fact extinguished) to insist that there be a written confirmation of such extinguishment plus a discharge of the caveat.

An interesting situation involving the need to differentiate between registration of an estate, interest or right (essentially to establish the priority of same) on the one hand, and the creation and existence of an estate, interest or right apart from any registration of same on the other hand, is found in Section 58(1)(c) of the MRPA.  Section 58(1)(c) provides that "any right-of-way or other easement, howsoever created, upon, over or in respect of, (the) land" binds such land in the title thereby affected without any registration or other recording of such right-of-way or other easement against the affected title.  If one agrees with the writer's foregoing thesis, then someone wishing to ensure the extinguishment of a right-of-way or other easement should obtain a written release, termination or other giving up of such right-of-way or other easement, whether or not the same has been registered.  Where a right-of-way or other easement has not been registered (and exists and binds the affected title by virtue of Section 58(1)(c)), it is obvious that there is nothing to be discharged in order to assist in removing or extinguishing the right-of-way or other easement; in such a situation, the issuance of a written confirmation of extinguishment is clearly required.  But the writer's thesis here is that even if a right-of-way or other easement has been registered by caveat, it is necessary to get a written confirmation of extinguishment of the same in addition to discharging the registration.


Consider the situation where there are two adjacent land owners and one has inadvertently effected improvements for the use and benefit of his or her land which trespass onto the other landowner's land.  The first mentioned land owner (the "Encroacher") discovers the encroachment and seeks and obtains a written easement agreement from the encroached upon land owner (the "Encroachee"), and the Encroachor registers a caveat giving notice of such easement agreement against the Encroachee's title.  Next assume that for whatever reason, the Encroachee decides that it doesn't want the encroachment to continue to exist, and induces the Encroacher to discharge the Encroacher's caveat.  Are the Encroacher's rights under the easement extinguished?  To be on the safe side, counsel for the Encroachee should insist on the Encroacher providing a written release and termination by the Encroacher of its easement rights (as well as insisting upon the Encroacher discharging its caveat).  The writer would also argue that in this situation, the release and termination document should also contain an extinguishment of any rights which the Encroacher may have had or might in the future have (or which might be acquired by any of the Encroacher's successors in title or anyone claiming under or through any of them in the future) under Sections 27 and 28 of the Law of Property Act (Manitoba) (the "MLPA").  These sections of the MLPA may give the Encroacher (or its successors and assigns) certain rights similar to what it had under the previous easement agreement, such rights arising/existing independently of any contract between the parties.


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