Lawsuits involving land are common in the County of Haliburton. Examples are disputes over rights of way and property lines. There may also be a dispute over the purchase of the land itself. A purchaser buys a rural or water front property but the deal does not close. The purchaser wants the property because it is a unique piece of land. He or she is worried that the property may be sold to someone else. What should the purchaser do?
The purchaser should start a lawsuit and claim in the lawsuit a “certificate of pending litigation.” A certificate of pending litigation is a legal document that can be registered against the disputed land to prevent the owner from selling the land until the lawsuit is disposed of. To obtain a certificate, the purchaser must first bring a motion before court to establish an “interest” in the land. One example of an interest in land is a lawsuit resulting from an aborted closing of a real estate transaction based upon an agreement of purchase and sale. Upon signing the agreement of purchase and sale, the purchaser gains an interest in the lands. Another example is a lawsuit involving lands owned by a partnership. If a plaintiff seeks a declaration in a lawsuit that he or she is a partner of the partnership, such a claim may establish an interest in the partnership lands.
An owner of land, whether vendor or partner, may seek to discharge the certificate that is registered against the lands. In determining the discharge issue, a court must look at all relevant matters between the parties, including the intent of the party in acquiring the land, whether the land is unique, and whether damages would be a satisfactory remedy to replace the certificate with or without other security in place.
There is an important caveat to remember when considering a certificate of pending litigation. A plaintiff who registers a certificate without a reasonable claim to an interest in land is liable for damages sustained by any person as a result of the registration. Such damages could occur in a rising real estate market because the certificate makes the lands unmarketable for the vendor.