May 01, 1997

Priority Between Registered Judgment and Buyer Prior to Completion; Strata Corporation, Age Restriction in a Restrictive Covenant #270


By Gerry Neely

What are the respective rights of a buyer, who had contracted to purchase property and a judgment creditor who had registered a judgment against the property, between the date of the Contract of Purchase and Sale and the date of completion? Three owners of a property had agreed to sell it to a buyer for $275,000. A judgment for $140,000 was registered in the Land Titles Office against the property, even though the judgment debtor had only a one-third interest in it.

As a result of the failure of the conveyancer to do the usual pre and post index searches that would have disclosed the existence of the judgment, the buyer became the registered owner of the property, subject to the judgment as a first charge. The new owner only became aware of this when the judgment creditor petitioned the court to order that the former owner's one-third interest in the property be sold.

The question, which as a judge said was one that had been discussed for more than 150 years, was whether the judgment attached to the property itself, or only to the interest that the one-third owner had in the net proceeds of the sale. The modern twist to this ancient discussion is the Torrens system of land registration in British Columbia. Under this system, which provides notice to third parties, the argument is that a creditor, who has registered his judgment, has given notice of this charge to any prospective buyer, and therefore has priority over the interest of an unregistered transfer.

The argument on behalf of the buyer is that a judgment creditor can only take whatever interest the debtor had in the property. The judge's decision was that the judgment creditor was only entitled to the interest the judgment debtor had in the net proceeds of the sale of the property, but not to the property itself. The request for an order for the sale of the property was denied.1

* * *

One of the difficulties in reading cases dealing with age discrimination is finding that the definition of an older citizen is someone who is at least 50 years of age, when everyone knows that at 50 you are just beginning to reach your prime.

That age was part of a definition in a restrictive covenant imposed by the District of North Vancouver upon the developer of a residential building intended for rental occupation by "active senior citizens." The restrictive covenant limited occupation, but not ownership, to persons over 19 years of age, who included someone at least 50 years of age. The building was subsequently strata titled. Between 15% and 20% of the units were occupied by owners and renters who were under the age of 50.

At the time the restrictive covenant was put in place, age was not a prohibited basis of discrimination in rental accommodation under the Human Rights Act. The owners who wanted the restrictive covenant nullified, argued that the age restriction in the covenant was discriminatory, and contravened section five of the Human Rights Act, which defines age for rental discrimination purposes, as 19 years or more and less than 65 years.

The judge was obviously reluctant to declare the restrictive covenant void, because the developers had received benefits and concessions on the basis of the construction of seniors' housing. His conclusion was that the age restriction was not discriminatory and did not contravene the Human Rights Act.

The result is that the restrictive covenant could be enforced with respect to owners, but not renters. An owner who intended to rent would have to comply with both the restrictive covenant and the Human Rights Act. This would prevent discrimination of renters between 19 and 65 years inclusive. The upper age limit could be reduced to 55 years of age or older, using the formula referred to in the exemption provided in the Human Rights Act, provided the strata owners were prepared to amend the bylaws.

Since the conclusion was based upon a restrictive covenant granted under the particular circumstances mentioned, and not a bylaw of a strata corporation, this decision may not affect the Marshall case discussed in Column No. 259.2

 1.Martin Commercial Fueling Inc. v. Virtanen and others, S.C.B.C., Court of Appeal, Reasons for Judgment, March 11, 1997.
 2.North Vancouver District v. Lunde, B.C.S.C., Reasons for Judgment, January 19, 1997.

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