Whose Responsibility is it to Prepare the Transfer Documents? #170
CATEGORY: Legally Speaking
TAGS: Contract of Purchase and Sale Property Law Act
By Gerry Neely
Paragraph 3 of the Contract of Purchase and Sale states that the purchaser will bear all costs of the conveyance; this is consistent with a number of decisions in the B.C. Supreme Court made between 1975 and 1990 which held that it is the purchaser's obligation to prepare and tender transfer documents.
These decisions did not refer to a 1960 B.C. Court of Appeal decision that Section 27 of the Land Title Act imposed an obligation upon the vendor to prepare and execute a registrable conveyance. This applies unless there is an express agreement to the contrary between the parties. Following the 1960 decision, changes were made to interim agreements to specify that conveyancing documents be prepared at the expense of and by the person designated by the purchaser.
Section 27 was repealed, but replaced in 1979 by a similar section in the Property Law Act, the effect of which (according to the most recent decision on this point) is to impose upon the vendor the obligation to prepare the transfer.
The evidence in a case heard in Vancouver on November 9, 1990, was that the purchaser's lawyer did nothing to indicate to the vendor's lawyer that the purchaser did not wish to proceed. No transfer documents were sent to the vendor's lawyer who assumed that it was not his responsibility to prepare them for delivery to the purchaser.
When the sale collapsed, the vendor sued for forfeiture of the $40,000 deposit and was met by the defense that it was the vendor's obligation to prepare the transfer documents.
The judge acknowledged that the practise in real estate transactions is that the purchaser's solicitor prepare the conveyancing documents. He also acknowledged that this was logical since it was the purchaser who bore the costs and it was the responsibility of the purchaser's solicitor to ensure that the purchaser was getting what he bargained for. He decided, however, that he had no alternative but to follow the Court of Appeal decision of 1960 that the vendor's duty was to prepare, execute and deliver a registrable transfer. Having failed to do so, the vendor was unable to demonstrate its readiness, willingness and ability to complete and the vendor's action for the deposit was dismissed.
The case is under appeal, but until it is reversed or the Contract of Purchase and Sale is changed by addendum or otherwise, the decision will make it difficult for a vendor's conveyancer to anticipate what steps need to be taken to protect the vendor.
Default of this kind is most likely to occur in a falling market, but any indication of reluctance by the purchaser to close means that the vendor's conveyancer must be prepared to tender transfer documents to protect the vendor's interest. A difficult problem for the vendor's conveyancer is posed if there is a very short interval of time between the date instructions are given and the date of closing, or if the purchaser's intentions are concealed until the last moment.
Vendor's lawyers may now have to put the purchaser's conveyancer on notice that if confirmation is not received that the transfer documents will be forthcoming by a certain date, the vendor will prepare them at the purchaser's cost. It is also possible, but one hopes unlikely, that a vendor's lawyer will take the position that he is entitled to prepare the transfer documents on behalf of his client at the purchaser's expense even if the purchaser is willing to complete.1
|1.||Kioussis v. Coil, SCBC Vancouver Registry C902248, Reasons for judgement dated December 11, 1990.|
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