A certificate of pending litigation (a CPL) is a form of charge
that can be registered on title to land where someone commences a
legal claim in which they assert an interest in that land. CPLs are
intended to protect the claimant's interest in that land. For
example, if a plaintiff asserts money they lent was used to
purchase or maintain land, they will claim a CPL. Similarly, a
purchaser will claim an interest in land where their vendor later
tries to get out of the sale.
As a practical matter, a CPL is an effective tool in tying up
land and putting pressure on its owner to resolve the dispute. It
is unlikely anyone else will deal with the land if there is a CPL
on title. For example, no one else is likely to buy the land and no
lender will take mortgage security because, if they do, their
interest in the land will be subject to the yet-to-be adjudicated
rights of the CPL holder.
CPLs are often used as a veiled method of leverage to secure a
financial claim or a tenuous interest in land. What, then, happens
if there is a CPL on title to your land and you need to get rid of
it? How do you go about that?
Absent agreement with the CPL claimant, your recourse is to seek
a court order removing the CPL. Section 256 of the Land Title
Act grants a land owner the authority to apply to court to
remove a CPL. On such an application, the court may cancel the CPL
outright, do so on term that security be posted instead, or may
refuse to cancel the CPL but require the CPL claimant to either
post their own security or give an undertaking to pay damages if
their claim ultimately fails.
On such applications, a threshold question is whether the land
owner can demonstrate "hardship and inconvenience" as a
result of the CPL. The hardship and inconvenience must be more than
trifling or insignificant. For example, if the CPL is thwarting a
sale, preventing development of the land or stalling a financing,
then "hardship and inconvenience" may well exist. The
next question is whether or not the land owner can establish that
an order requiring security is proper and that damages will provide
adequate relief to the CPL claimant rather than the land itself.
For example, if the claim is only about monies owed to a
contractor, damages will suffice.
However, if the claim is for specific performance of the sale of
a unique parcel of land, damages will not be an adequate remedy.
Where the claim is for specific performance, it must be plain and
obvious that it will not succeed in order to have the CPL
cancelled. However, the CPL claimant must also prove readiness and
willingness to perform their contractual obligations. This includes
continuing of future obligations of the purchaser that are
interdependent and to be performed concurrently with obligations of
the vendor that the purchaser seeks to enforce. In other words, if
you needed financing to complete the purchase but have not or
cannot obtain it, the specific performance claim will fail, even if
the land is "unique." In cases like this, the fight over
cancelling the CPL will revolve around the issue of whether or not
the subject property is sufficiently "unique" that
specific performance is an appropriate remedy.
If a purchaser is not entitled to specific performance, then it
follows that damages are an adequate remedy. The CPL will be
cancelled. If a CPL is cancelled and replaced by posting security,
then the court will need to set the amount of the security. It will
not always be the amount of the claim. The amount depends, among
other things, on the strength of the case.
If you seek to remove a CPL from your property, you will need to
analyze the underlying claim and assemble the evidence necessary to
convince a judge there is little or no merit to it. You will also
need to be prepared, and should consider proposing, an amount of
security to post as an alternative.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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