The Alberta Land Titles Office (the "LTO") has long been subject to registration delays, with the gap between submission of a document to the LTO and completion of its registration historically taking one to two weeks. However, the COVID-19 pandemic and recent hot Alberta real estate market, have resulted in the average LTO registration time increasing significantly to over three months. This raises a number of difficulties for the closing of real estate and secured financing transactions.
While the gap coverage offered in standard commercial title insurance policies and the Western Law Societies' Conveyancing Protocol both remain available to parties looking to close their transactions without waiting three-plus months for registration to complete, these options may not always be feasible or otherwise apply in the circumstances. In April 2021, in an effort to offer parties another alternative to dealing with lengthy registration delays, the provincial government introduced, by way of amendments to the Land Titles Act and its regulations, a pending registration queue system (the "PRQ").
What is the Pending Registration Queue?
The PRQ is a system whereby documents that have been submitted for registration to the LTO are noted under the "Pending Registration Queue" on title to the applicable parcel of land shortly after submission. With the pending registrations in the PRQ visible toward the bottom portion of every Alberta land title, parties are now able to pull title to a given parcel and quickly determine what prior submissions, if any, are waiting to be registered and in what order. Accordingly, rather than waiting out the lengthy registration gap only to be surprised by an intervening registration, transacting parties are now able to determine whether there are any potential pending registrations that are likely to take priority over their document at the time of their submission. These parties may then review any intervening registrations and elect to proceed or not with their transaction, or otherwise take such steps as may be needed to address the potential issues raised by any pending registrations identified.
How does it work?
The PRQ has been inserted seamlessly into the standard LTO workflow and, subject to a few limited exceptions, all documents submitted for registration are automatically entered into the PRQ. Every document submitted to the LTO for registration must be accompanied by a Document Registration Request ("DRR") prepared by the submitting party, being a companion document outlining the type of instrument being registered and the legal land identification number associated with the parcel of land against which the instrument is to be registered. The document is then entered into the PRQ, with the data in the DRR used to populate the applicable fields in the PRQ. Instruments are then given priority on the basis of the chronological order in which they are entered into the PRQ, subject to certain limited exceptions, such as the correction of errors made by the Registrar of Titles or pursuant to court orders.
What happens if the instrument is rejected?
With the LTO rejecting approximately 30% of all instruments it receives, how does the PRQ handle instruments that are submitted into the PRQ for registration (thereby securing their priority) that are later rejected by LTO staff? For the majority of deficiencies, the submitting party is given 30 days to rectify any issues and to re-submit, with the submitted document maintaining its priority, provided the deficiency is remedied within the allotted time. In the event the deficiency is not remedied within the 30-day window, the instrument is removed from the PRQ and its priority is lost. In instances where the Registrar of Titles determines that the instrument cannot reasonably be corrected or was submitted in bad faith, the instrument may be rejected outright with no period for rectification.
Things to keep in mind with respect to the PRQ:
- Time sensitive registrations: Time sensitive registrations, such as builders' liens, which previously needed to be registered on an expedited basis, will now be registered in the same order as any other instrument. Expedited registration is no longer necessary for these types of document as the registration requirement is deemed satisfied upon the instrument's entry into the PRQ, which happens shortly after submission.
- Certain document types do not appear on PRQ: Given that instruments are entered into the PRQ by reference to the legal land ID set forth in the applicable DRR, a number of limited types of registrations that do not require a legal land ID (such as tax arrears lists) will not appear in the PRQ. Parties should keep in this in mind, and may wish to consider title insurance or other means to address any potential concerns.
- PRQ Registrations cannot be reviewed in detail: When an instrument is entered into the PRQ, certain key pieces of information, including the type of registration and the name and contact information of the submitting party, are noted on title, but the instrument itself cannot be reviewed in detail. Accordingly, in instances where there is any concern regarding the nature of an instrument in the PRQ, parties (or their counsel) will need to contact the party that submitted the applicable DRR for greater detail as to the nature of the intended registration.
- PRQ reliant on DRR accuracy: As it is the content of a DRR that populates the applicable fields in the PRQ, it is now more important than ever that a submitting party exercise caution in preparing DRRs correctly, and that other parties' looking to deal with a given property understand the risks of inaccurate DRRs. If, for example, a party makes an error in describing the type of instrument being registered (e.g. describing a mortgage as an easement), the instrument will be rejected. In order to protect subsequent registrants who may have relied on the erroneous registration type, the rejected instrument and associated DRR cannot be corrected and re-submitted until all parties with subsequent registrations in the PRQ consent to the change of instrument type.
- Optional regime: Although the vast majority of documents submitted to the LTO for registration are automatically and necessarily entered into the PRQ shortly after their submission, the decision to close a given transaction in reliance on the PRQ is strictly optional. Accordingly, in the event parties wish to close via the PRQ, they are encouraged to properly note this intention in the applicable sale (or other) agreement. It is also important to note that, with the PRQ regime still being relatively new, lenders may not yet have updated their instructions to permit funding in reliance on the PRQ, and this should be considered by any potential purchaser before they agree to close via the PRQ.
- Two hour delay: We have previously discussed the documents being added to the PRQ "shortly" after their submission, but more precisely the LTO will take approximately two hours to enter a submitted registration into the PRQ. Parties who hope to close in reliance on the PRQ are therefore encouraged to pull title two hours after submission in order to ensure (a) their submissions have been properly inserted into the PRQ and (b) no intervening registrations had been submitted by other parties during the applicable two-hour window.
A little over a year since its inception, we are slowly seeing more deals closed in reliance on the PRQ, though it still remains strictly optional and a decidedly uncommon way of closing real estate transactions in Alberta. The PRQ can be a valuable tool and allow parties to forgo title insurance costs, but whether it is appropriate for a given transaction is highly dependent on various factors, including the relationship between the parties, the type of deal, and the associated documentation to be submitted to the LTO.
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.