Over the past decade, it was common for documents submitted to the Alberta Land Titles Office to take anywhere from two to four weeks to be processed and registered. As of the date of this article, the Alberta Land Titles Office is taking nearly three and a half months to complete the registration of most submitted documents. This includes transfers of land, the instruments which change registered ownership of real estate property on title from sellers to buyers.
This delay has significant impacts on the completion of certain kinds of real estate transactions. Regular residential transactions for new or used homes, or used condominiums are not as severely effected, due to the Western Law Societies’ Conveyancing Protocol. This Protocol allows lawyers to complete transactions and exchange of funds before change in ownership on title has been registered, so buyers and sellers can pick whatever date is most convenient for them and allow Land Titles to eventually catch up.
However, it is important to note that the Protocol is not available for many other kinds of transactions, including:
- Agricultural property;
- Commercial property; and
- New condominiums
For these types of property, registration of the transfer of ownership at the Alberta Land Titles Office must be completed before funds change hands. Lenders will not forward mortgage funds until the title in the name of the Purchaser is available. Furthermore, before submitting to Land Titles, both the seller and purchaser’s lawyers must have the entire down payment in trust, and all documents completed, making the title registration the last item they are waiting on. So, if you were purchasing a $1,000,000.00 piece of farmland, and had all your documents and money ready on May 15th, the transaction would not be completed until the end of August. Obviously, this is an excessive amount of time to wait, and makes it very difficult to complete these transactions and carry-on business.
The primary way to deal with this delay is through the acquisition of a title insurance policy. Title insurance covers common issues that may happen with the title during the three and a half month waiting period, such as intervening registrations for Canada Revenue Agency debts or builders’ liens that may affect the transfer. Therefore, the transaction can be completed on whatever day the purchaser and seller choose much like if the Protocol were allowed. However, title insurance is not cheap, and the cost depends on the value and nature of the property. Using the $1,000,000.00 piece of farmland example above, it would likely cost anywhere from $1,500.00 to $3,000.00 for the policy, It can be to both the purchaser and seller’s benefit to acquire the title insurance policy and have the transaction conclude more rapidly and within a reasonable timeframe. It would be advisable to speak to your Realtor® regarding title insurance, and if the parties are agreeable to splitting the cost, have this agreement documented in your purchase and sale contract.
New condominiums are also a challenge, as most condominium contracts are skewed heavily in favour of the builders, and do not specify a clear closing date. Rather, once the unit is completed, the builder is entitled to impose a date on the purchaser, by which time they must complete their transaction or face heavy penalties. Often builders want their deals to close as rapidly as possible when a unit is complete so they can pay down their own construction financing. Over the past months, we have seen numerous builders provide rapid closing dates which purchasers simply cannot comply with due to the Land Titles Office delays. Moreover, title insurance is not always available on a new condominium. If you have a contract for the purchase of a new condominium that is currently under construction, it would be advisable to have the purchase contract reviewed by your lawyer. Land Titles is not speeding up registration any time soon, and it is important to ensure you are aware of what potential penalties you face, and to negotiate those penalties with the builder well ahead of time.
In this, the tenth instalment of our series with Dan Hawkwood, an Associate Lawyer at Beaumont Church LLP in Calgary, Dan discusses the impacts of delays at the Alberta Land Titles Office. Dan comes from a long line of farmers and ranchers in the Calgary area and brings the experience of his rural upbringing to his practice.