You have been retained by a married or common-law cohabiting couple to act for them in connection with their acquisition of a residential property. At the time your clients come to your office to be advised generally on the transaction and to "sign up" the required documents, including, in particular, the mortgage they intend to have registered against the property upon their acquisition thereof:
(i) one (or both) of your clients have signed a binding purchase and sale agreement; and
(ii) they have not yet commenced to occupy the property as their residence.
You place the mortgage documentation before your clients, explaining that they will have to sign and swear (or affirm) as to the fact that the property is their homestead under The Manitoba Homesteads Act (the "Act"), and where one only of your clients is to be on title, the "off-title" client must provide a Homesteads Act consent to the mortgaging which is to be acknowledged separate and apart from the "on-title" client. This would be a scenario repeated time and again throughoutManitobain lawyers' offices.
But is this in fact a correct procedure? At the time that the clients attend upon you to sign the mortgage - with its accompanying statements under the Act - given that your clients are not yet occupying the property as their residence, does the Act apply? Would it be more appropriate for the Homesteads Act statement negativing the application of the Act to be made?
The writer has to credit Mr. Gordon Hoeschen of Hoeschen & Sloane in Morden for raising this question/problem, and the writer thanks Mr. Hoeschen for same.
Consider the following:
- The definition of "homestead" in Section I of the Act clearly refers to a residence being occupied by a couple. Section 4(a) of the Act, referring to the need for there to be a consent to a disposition, does not say (one way or the other) that when the consent is given, the person giving it (and his or her "on-title" spouse) have to then occupy the subject residence although it does refer to a consent to a disposition of a "homestead" (which as just noted, is defined on the basis of occupancy by a couple).
- Section 5(1) of the Act, referring to the mode of creation of "proof" as to the non-applicability of the Act, does appear to require that when the statements are made, they are to "speak" from the time when the statements are made, not as to what will or will not be the case at some future time. (In this regard, Section 194 of the Manitoba Real Property Act must be kept in mind, in that it deems a statement contained in a prescribed form - admittedly "prescribed" meaning prescribed under the Real Property Act, not the Homesteads Act - to be the equivalent of a statement made under oath or in an affidavit, affirmation or statutory declaration under the Manitoba Evidence Act, although it is logical to assume that the intent of the legislation was that the statement should/would "speak" from the time when it is made).
- The definition of "land" in the Manitoba Real Property Act, Section 1 refers to, inter alia "land, …of every kind and description, whatever the estate or interest therein, and whether legal or equitable…". Is this definition broad enough to include a future/prospective interest in land, for example, the homestead rights (and obligations) that an "off-title" spouse and his or her "on-title" spouse will acquire when they take up occupancy of the subject property? Is there a more or less current, existing interest, at least in the person who intends to be "on-title", provided that he or she is a purchaser under a purchase and sale agreement, so that at the time the Homestead Act statements are made in a mortgage, at least the intended "on-title" spouse has at that time a sufficient equitable interest in the subject property by virtue of the purchase and sale agreement?
- Sections 63(2), 63(3) and 66(4) of the Manitoba Real Property Act provide, in effect, that an instrument (whether a mortgage or otherwise) only effectively performs its function when it is duly registered against title at the Land Titles Office. This appears to support an argument that the provision of Act evidence and the making of acknowledged consents to dispositions of a homestead "speak" or take effect prospectively, that is, only when the instrument is registered, notwithstanding that the language of the Act prescribed statements and the language of the Homestead Act consent (which appears in the prescribed forms of mortgage and transfer, etc.) appear to "speak" currently and not prospectively.
After considering this matter, I believe that those who argue that prior to occupancy, there are no homestead rights, are probably correct. However, I think that the timing problem could be alleviated - and solicitors dealing with the above-described situation can arrange for the provision of the Homestead Act statements or, as the case requires, acknowledged Homestead Act consents, at the time when the parties attend upon the solicitor. This would be done by changing the wording of the Homestead Act statements and consent to disposition so that they either (ie., "pick one" as is (then) applicable) "speak" currently or, as the case requires, that they "speak" prospectively and contingently. The contingency here is simply that the parties who sign the documents subsequently take up occupancy. If that occupation occurs after the instrument is registered, the Homestead Act statements, or as the case may be, acknowledged consent, would validate the transaction previously effected by the registration of the instrument. If occupancy is taken up between when the document is signed and when registration occurs, then the Homestead Act statements, or, as the case may be, the acknowledged consent, would be deemed to take effect immediately or perhaps thereafter at the time of registration. If after the time of signing, the parties never take up occupancy (because they choose to live elsewhere) but the "on-title" spouse wishes to go through with the acquisition and mortgaging, then the Homestead Act statements, or as the case may be, the Homestead Act acknowledged consent would simply be deemed to not exist (or perhaps, the "on-title" spouse's Homestead Act statement would be deemed to be given at the time of registration and the statement "The within land is not the homestead of me within the meaning of the Manitoba Homesteads Act" would be deemed to have been made by the spouse taking title.
Examples of prospective statements might be:
"My co-mortgagor is my spouse (common-law partner) and (he/she) has Homestead Act rights in the within land by virtue of our occupancy of the within land as our home" ("We do not occupy the within land at the date of this statement, but we intend to so occupy same in the future, and when and if we so occupy, my co-mortgagor who is then my spouse or common-law partner will have Homestead Act rights in the within land upon our so commencing to so occupy the within land").
The writer appreciates that the foregoing described "solution" to the timing problem would require a statutory amendment to the Act.