Pan Canadian Mortgage Group v. 679972 B.C. Ltd., 2013
BCSC 1078 (Pan Canadian), addresses the nature and
priority of a purchaser's lien, which, in general terms, is a
financial charge that results when a purchaser pays a deposit
toward the purchase price under a contract of purchase and
In Pan Canadian, a construction lender had foreclosed
on a development property and the money owed to it was fully
satisfied by a portion of the proceeds of the resulting sale. The
remaining balance was paid into court, leaving two groups of
creditors, whose collective claims exceeded the remaining balance,
to dispute their relative priority to repayment.
The first group consisted of purchasers who had paid deposits
for townhomes which were never built by the owner-developer. The
second group consisted of secured creditors who had registered
judgments against the property.
In order to determine the priority of the two groups of
creditors to repayment of the amounts owed to them, the chambers
judge considered whether the purchasers held purchasers' liens.
She stated that
a purchaser's lien is a "well-established equitable
charge over property that arises at the time a purchaser of
property provides a deposit or funds to the vendor or their agent
in part or whole payment of the purchase price." According to
the chambers judge, such payment is security for the completion of
the purchase and, if the purchaser fails to perform, the vendor has
security against the funds, whereas if the vendor fails to perform,
the purchaser can recover the funds and is entitled to a lien over
the property and is a secured creditor.
The purchasers of the townhomes were able to establish that they
had purchasers' liens because they had provided funds to the
vendor for the purchase of land, but the contracts did not complete
through no fault of the purchasers. The parties had agreed that, if
the purchasers established that they had purchasers' liens, the
liens would rank in priority to the judgments of the other secured
creditors. Accordingly, the purchasers were entitled to be paid out
in priority to the secured judgment creditors.
Pan Canadian is important because it confirms that,
where a purchaser's lien is established, the purchaser may
become a secured creditor of the vendor with a lien over the
property. Purchasers should nonetheless be aware that, because a
purchaser's lien is an equitable remedy, granted in the
discretion of the court, purchasers may succeed in establishing
such a lien only if they have performed their obligations under the
contract and, as such, come to the court with "clean
Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
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