A condominium owner about to sell his residential unit and parking unit was surprised to find out that due to inadvertence when his real estate purchase transaction closed, legal title to the parking unit was never transferred to him.
The agreement of purchase and sale had clearly indicated that the owner was buying both the residential unit and the parking unit, both of which were included in the purchase price. From and after the closing of the transaction the owner used the parking unit and paid the common expenses and realty taxes on it. The conveyancing error was not discovered until over 17 years later, when the owner wanted to sell his unit. By then the vendor, who was still the registered owner on title, could not be located.
The owner commenced a court application seeking a declaration as to his ownership of the parking unit. This was somewhat problematic as the parking unit was registered under the Land Titles system. The Land Titles Act does not recognize any right of adverse possession as against the registered owner of property. In addition there were potential issues with limitation periods as so much time had passed since the error had occurred.
In reaching his decision, the judge was able to overcome these potential pitfalls. The judge concluded that:
- As the owner had paid the full purchase price for both the residential unit and the parking unit, the owner had obtained equitable title to the parking unit and the vendor became a constructive trustee for the benefit of the owner, who was the beneficial owner of the parking unit;
- The right of a beneficiary of a trust to enforce his or her title as against the trustee is governed by the Real Property Limitations Act, which has a ten-year limitations period, but is subject to the principle of discoverability;
- As the owner had only recently discovered the error and continued to possess the property the owner’s claim was not statute-barred.