What risk does a certificate of pending litigation pose if I'm buying a distressed property in Ontario?

A certificate of pending litigation is a notice registered against a property's title that flags an active lawsuit claiming an interest in, or otherwise disputing ownership of, that specific property. If one shows up on title during your due diligence for a distressed purchase, it is a serious red flag rather than a minor technicality - it means someone else is actively asserting a competing legal claim to the property you are trying to buy, and that dispute has not yet been resolved.

Closing a purchase while a certificate like this remains registered and unresolved can expose you to the underlying dispute, since your ownership could later be affected by however that litigation is ultimately decided. In a distressed purchase specifically, where the seller's own representations are often limited to begin with, a registered certificate makes an already higher-risk transaction meaningfully riskier still.

Treat a certificate of pending litigation as something that generally needs to be resolved, discharged, or otherwise properly addressed before closing, rather than something to proceed past and hope works out.