Bill 136, Restore the Deed Act, 2006

Versions

Bill 136 2006

An Act to amend the
Land Titles Act

Note: This Act amends the Land Titles Act. For the legislative history of the Act, see Public Statutes - Detailed Legislative History on www.e-Laws.gov.on.ca.

Preamble

Whereas it is in the public interest that the land titles registration system be reformed to reduce the impact of title fraud on Ontario's home and business owners;

And whereas it is desirable to revise and extend protection to those who rely on the land titles registration system in Ontario by implementing measures to prevent fraud and that reduce the damage of fraud when it occurs;

And whereas to achieve these goals it is necessary to ensure that the Land Titles Assurance Fund is a fund of first resort for victims of fraud and that its procedures are improved so that claims for compensation from the Fund are handled with due speed and efficiency;

Therefore, Her Majesty, by and with the advice and consent of the Legislative Assembly of the Province of Ontario, enacts as follows:

1. The Land Titles Act is amended by adding the following Part:

PART I.1
MEASURES TO PREVENT FRAUD

Certain persons may request changes

2.1 (1) No person may apply for the registration of a document or instrument on the register unless the person is,

(a) a member of the Law Society of Upper Canada;

(b) a broker or salesperson registered under the Real Estate and Business Brokers Act, 2002;

(d) an Ontario land surveyor;

(e) a minister of the government of Canada or Ontario;

(f) a person authorized by the council of a municipality by by-law made under subsection 31 (1) to apply to the land registrar to have land within the municipality registered; or

(g) a financial institution within the meaning of the Office of the Superintendent of Financial Institutions Act (Canada).

Same

(2) Where a provision of this Act allows a person to apply for registration of a document or instrument on the register, the provision shall be read consistently with subsection (1), namely as requiring that person to make the application through a person described in subsection (1).

Same

(3) The land registrar shall not accept an application for registration of a document or instrument on the register unless the application is made through a person described in subsection (1).

Notifications

2.2 When the land registrar registers a new owner, a new charge, encumbrance or discharge in respect of land, he or she shall send a notification to,

(a) the former registered owner, in the case of registration of a new owner; and

(b) the current registered owner, in the case of registration of a new charge or encumbrance.

Registrar's powers

2.3 (1) In addition to any other power he or she has under this Act, the land registrar may of his or her own accord and without affidavit,

(a) refuse to register someone or something on the register if, in his or her opinion, the refusal may prevent fraud; or

(b) register a caution to prevent dealing with any registered land if, in his or her opinion, the caution may prevent fraud.

Same, reversal

(2) The land registrar may reverse an action taken under subsection (1) if he or she is satisfied that the refusal or caution is not necessary to prevent fraud.

Hearing

(3) The land registrar may hold a hearing in respect of an action taken under subsection (1) before reversing the action and section 10 applies to the hearing.

Appeal

(4) If the land registrar does not reverse an action taken under subsection (1) or initiate a hearing within 60 days of taking the action, any person who is adversely affected may appeal the registrar's action to the court,

(a) within 30 days after the end of the 60-day period, in the case of a refusal to register someone or something on the register; and

(b) at any time after the end of the 60-day period, in the case of a caution that prevents dealing with registered land.

Personal identification numbers

2.4 (1) The land registrar shall establish and maintain a secure system that allows for personal identification numbers to be assigned to,

(a) registered owners of land; and

(b) registered mortgagees.

Automatic assignment of number

(2) On and after the day this section comes into force, every person who becomes a registered owner of land or a registered mortgagee shall be assigned a personal identification number that identifies the person as the registered owner or mortgagee, as the case may be.

Application for number

(3) Every person who was the registered owner of land or registered mortgagee on the day this section came into force shall be assigned a personal identification number that identifies the person as the registered owner or mortgagee, as the case may be, if the person applies for one to the land registrar.

Owner may register caution

2.5 (1) The registered owner of land may apply for the registration of a caution to prevent dealing with the registered land.

Effect of caution

(2) After a caution has been registered, the land registrar shall not register anyone or anything on the register with respect to the land without the consent of the registered owner.

Owner may remove caution

(3) The registered owner of land may apply for the removal of a caution at any time.

Owner must use PIN

(4) If the registered owner of land has had a personal identification number assigned to him or her under section 2.4, the land registrar shall require the registered owner to use that number when,

(a) indicating consent for the purposes of subsection (2); or

(b) applying for the removal of a caution under subsection (3).

Use of PIN

2.6 If a registered owner of land or mortgagee has had a personal identification number assigned to him or her under section 2.4, the land registrar may require that person to use that that number in any circumstances under this Act if, in the land registrar's opinion, requiring that person to use the personal identification number may prevent fraud.

2. The Act is amended by adding the following section:

Administration of Fund

Board to administer

54.1 (1) The Fund shall be administered by a board to be appointed by the Lieutenant Governor in Council and to be known in English as the "Assurance Fund Board" and in French as "conseil de la Caisse d'assurance".

Composition

(2) The Lieutenant Governor in Council shall appoint,

(a) no fewer than five members to the Board;

(b) one member of the Board as chair and one or more as vice-chairs who may act in the absence of the chair;

(i) consumer protection organizations,

(ii) the real estate industry, and

(iii) the law enforcement community.

Role of chair

(3) The chair shall have general supervision and direction over the conduct of the affairs of the Board, and shall arrange sittings of the Board and assign members to conduct hearings as circumstances require.

Role of board

(4) The Board is responsible for determining appropriate payment out of the Land Titles Assurance Fund, if any, on application by any person under this Act.

Same

(5) Where an application is made under this Act for payment out of the Assurance Fund, the chair of the Board shall refer the application to one or more members of the Board for determination.

Same

(6) Where the circumstances require a hearing, the chair shall refer the matter to a panel of no fewer than three members of the Board.

3. Section 56 of the Act is amended by striking out "Director of Titles" wherever it appears and substituting in each case "Assurance Fund Board".

4. (1) Subsection 57 (4) of the Act is repealed and the following substituted:

Liability of Fund to compensate person wrongfully deprived

(4) A person wrongfully deprived of land or of some estate or interest therein is entitled to have the compensation paid out of the Assurance Fund if the application is made within six years from the time of having been so deprived or, in the case of a person under the disability of minority, mental incompetency or unsoundness of mind, within six years from the date at which the disability ceased.

Clarification

(4.1) For greater certainty, a person entitled to have compensation paid out of the Assurance Fund need not take any steps to recover just compensation under subsection (1) before applying for compensation from the Fund.

(2) Subsection 57 (6) of the Act is amended by striking out "Director of Titles" and substituting "Assurance Fund Board".

(3) Subsections 57 (7) to (10) of the Act are repealed and the following substituted:

Hearing

(7) Except where the member or members who consider the application determine that the claim be paid in full, the chair of the Assurance Fund Board shall order a hearing be held, and the claimant and such other persons as the chair may specify are parties to the proceeding.

How compensation to be determined

(8) The liability of the Assurance Fund for compensation and the amount of compensation shall be determined by the panel of members of the Assurance Fund Board assigned to hear the application.

Amount of compensation

(8.1) A person may be compensated from the Assurance Fund for,

(a) the value of the land or estate or interest therein of which the person was wrongfully deprived; and

(b) reasonable legal costs associated with making a claim for compensation out of the Fund, including costs associated with a hearing under subsection (7).

Claimant to be notified

(9) The panel of the Assurance Fund Board shall serve notice of its determination under subsection (8) by registered mail on the claimant.

Appeal

(10) Where the panel of the Assurance Fund Board determines that compensation should be paid but that the claim not be paid in full, the claimant, if intending to appeal, shall, within a period of 30 days after the date of mailing of the notice under subsection (9), serve on the chair of the Board notice of intention to appeal under section 26, and the chair shall not certify under subsection (11) the amount to the Treasurer of Ontario if a notice of appeal is received within that period or until after the expiry of that period if no notice of appeal is received.

(4) Subsection 57 (11) of the Act is amended by,

(a) striking out "Director of Titles shall certify" and substituting "chair of the Assurance Fund Board shall certify"; and

(b) striking out "Director of Titles' certificate" and substituting "chair's certificate".

(5) Subsection 57 (12) of the Act is amended by,

(a) striking out "name of the Director of Titles" and substituting "name of the chair of the Assurance Fund Board"; and

(b) striking out "Director of Titles' certificate" and substituting "chair's certificate".

5. Subsection 70 (2) of the Act is repealed and the following substituted:

Registration

(2) An original power of attorney may be registered in the prescribed manner if,

(a) it is filed personally by the donor of the power of attorney and he or she provides proof satisfactory to the land registrar of his or her identity;

(b) it is filed by a person other than the donor and is accompanied by other evidence satisfactory to the land registrar that it is authentic, such as an affidavit from a witness to the power of attorney.

No copies

(2.1) For greater certainty, a copy of a power of attorney, whether notarized, certified or otherwise guaranteed to be authentic, may not be registered on and after the day this subsection comes into force.

6. Section 78 of the Act is amended by adding the following subsection:

Clarification - fraud

(4.1) For greater certainty, subsection (4) does not operate to validate an instrument that, if unregistered, would be fraudulent and void.

7. Section 156 of the Act is amended by adding the following subsections:

Same - false information

(2) Every person is guilty of an offence if the person,

(a) falsifies, assists in falsifying or induces or counsels another person to falsify or assist in falsifying any information or document relating to the registration of someone or something on the register; or

(b) knowingly applies for, assists in applying for or induces or counsels another person to apply for the registration of someone or something on the register based on false information or a fraudulent document.

Penalties

(3) Subject to subsection (4), an individual who is convicted of an offence under subsection (2) is liable to a fine of not more than $50,000 or to imprisonment for a term of not more than two years less a day, or both, and a corporation that is convicted of an offence under subsection (2) is liable to a fine of not more than $250,000.

Same - certain professionals

(4) An individual who is convicted of an offence under subsection (2) is, in addition to any penalty imposed under subsection (3), liable to a fine of not more $50,000, if,

(a) the individual is a member of the Law Society, a real estate broker or salesperson, a mortgage broker, an appraiser or a surveyor; or

(b) the individual deals with real estate or mortgages in his or her professional capacity.

8. The Act is amended by adding the following section:

Special rules relating to fraud

157.1 (1) This section applies if someone has fraudulently procured an entry on the register and establishes rules that apply to protect the interests of an innocent person,

(a) who has lost status as the registered owner of land as a result of the fraud;

(b) who has lost status as a registered mortgagee of land as a result of the fraud; or

No conviction necessary

(2) This section applies whether or not someone has been convicted for an offence under this Act or the criminal law of Canada with respect to the fraud.

Time of fraud

(3) This section applies to past as well as future cases.

Reinstatement of registered owner

(4) If the land registrar is satisfied that a person has lost status as the registered owner of land as a result of fraud and who, absent the fraud and any subsequent transactions that relied on the fraud, would be the registered owner of the land, the land registrar may,

(a) cancel any registrations on the register that relate to the fraud;

(b) cancel any entries on the register that were registered subsequent to the fraud; and

Reinstatement of mortgagee

(5) If the land registrar is satisfied that a person lost status as a registered mortgagee of land as a result of fraud and who, absent the fraud and any subsequent transactions that relied on the fraud, would be a registered mortgagee of the land, the land registrar may,

(a) cancel any registrations on the register that relate to the fraud;

(b) cancel any entries on the register that were registered subsequent to the fraud; and

Cancellation of encumbrance

(6) If the land registrar is satisfied that land has become charged or encumbered as a result of fraud and that, absent the fraud and any subsequent transactions that relied on the fraud, the land would not be so charged or encumbered, he or she may,

(a) cancel any registrations on the register that relate to the charge or encumbrance; and

(b) cancel any entries on the register that were registered subsequent to the fraud.

Innocent third parties

(7) If, in reliance on a fraudulent entry on the register, an innocent person became registered as the owner of land or of a charge upon land and that person's interest is adversely affected by a change in the register made by the land registrar under this section,

(a) the innocent person shall have no claim against the land;

(b) the innocent person shall have no claim against a person who was reinstated as the registered owner; and

(c) the innocent person is entitled to a remedy in accordance with section 57, including compensation from the Land Titles Assurance Fund.

Commencement

9. (1) Subject to subsection (2), this Act comes into force on the day it receives Royal Assent.

Same

(2) Sections 1, 2, 3 and 4 come into force six months after the day this Act receives Royal Assent.

Short title

10. The short title of this Act is the Restore the Deed Act, 2006.

EXPLANATORY NOTE

The Bill makes numerous amendments to the Land Titles Act, including the following:

1. New Part I.1 (Measures to Prevent Fraud) is added to the Act. Part I.1 will,

(a) place limits on who may apply for the registration of a document or instrument on the register;

(b) require the land registrar to send notifications to an owner when registering a new owner or a new charge;

(c) empower the land registrar to refuse to change the register or enter a caution to prevent dealing with land if he or she thinks it may prevent fraud;

(d) require the land registrar to establish a secure system of personal identification numbers that will identify registered owners of land and registered mortgagees;

(e) allow the registered owner of land to apply for the registration of a caution to prevent registrations in respect of the land without that owner's knowledge and consent.

2. Changes to Part V of the Act will require the Land Titles Assurance Fund to be administered by a Board to be appointed by the Lieutenant Governor in Council. The Board will be responsible for determining appropriate payments out of the Fund.

3. Subsection 57 (4) is amended to remove the requirement that a person wrongfully deprived of land or an interest in land attempt to recover compensation or damages from a third party before applying to the Assurance Fund for compensation for the loss.

4. New subsection 57 (8.1) will allow a person to be compensated from the Assurance Fund for reasonable legal fees as well as the value of the interest in land of which the person was wrongfully deprived.

5. Under existing subsection 70 (2), a notarized or certified copy of a power of attorney can be registered. The Bill replaces that with a provision will allow only an original power of attorney to be registered.

6. New subsection 78 (4.1) will clarify that a document that would otherwise be fraudulent and void does not become validated because it is registered.

7. There will be a new offence set out in section 156 related to registrations based on false information and documents. Certain professionals, such as lawyers, real estate brokers and mortgage brokers, will be subject to higher penalties if convicted of the offence.

8. New section 157.1 will set out special rules that apply to protect the interests of an innocent person whose interest in land is adversely affected by a fraudulent entry on the register. The land registrar is empowered to restore the interest of such a person and remove entries on the register that were added subsequent to the fraud. Third parties who are also innocent and who relied on a fraudulent entry and who lose their interest in land when the interest of the original innocent party is restored will be able to make a claim for compensation from the Land Titles Assurance Fund.