A Caveat Filed Against Your Alberta Property: What Next?

You check your title, perhaps before selling or refinancing, and find a caveat you did not expect. It is natural to worry that your sale or mortgage is stuck.

This article explains in plain terms what a caveat is, how it affects a sale, and the main ways to challenge it. Details depend on the facts, so treat this as a map and not a substitute for advice.

This article covers the law of Alberta.

What a caveat is and who can file one

A person claiming to be interested in land for which a certificate of title has been issued may file a caveat with the Registrar. Grounds include a will, trust deed, instrument of transfer or an unregistered instrument.

Think of it as a public flag on title. It does not prove the claim is valid. It simply tells the world that someone says they have an interest.

The kinds of documents that can support a caveat are varied. In plain words, the person filing may be relying on one of these:

• A will that they say gives them an interest in the land.
• A trust deed, which is a document setting up a trust.
• An instrument of transfer, which is a document moving an interest in land.
• An unregistered instrument, meaning a document that has not itself been registered on title.

Knowing which of these the caveator relies on is usually the first step in judging how serious the caveat is.

Does a caveat block a sale?

While a caveat remains in force, an instrument registered after it is subject to the caveator's claim. A caveat is registered with the same priority effect as an instrument.

A caveat does not by itself prohibit a sale. However, a buyer takes subject to the caveator's claim. In practice, buyers and lenders often will not proceed until the caveat is dealt with, so it can hold up a deal even though it is not a formal ban.

This is why timing matters. If a closing date is approaching, it is worth finding out early what the caveat claims, so that you and your lawyer can decide how to deal with it before the deal is at risk.

Challenging a caveat: the lapse route

One route is a notice requiring the caveator to take proceedings. The caveat lapses on application made after 60 days following service of the prescribed notice. On an ex parte application, the court may shorten the 60 days. The prescribed form and process should be confirmed with a lawyer.

There are important limits on this route:

• Lapse does not occur if the caveator takes proceedings in court by application and a certificate of lis pendens is filed.
• A judge may extend the time for proceeding for sufficient cause shown, on application made before the time expires.
• The lapse process does not apply to a caveat protecting a restrictive covenant; that caveat may be modified or discharged only by court order under section 48.

Because the caveator can respond by going to court, the lapse route is not a guaranteed way to clear title. It works best when the caveator does nothing within the time allowed, and whether that is likely depends on the facts.

Challenging a caveat: the court route

The applicant or owner may at any time apply to the court calling on the caveator to show cause why the caveat should not be discharged. You do not have to wait for the 60 days to pass.

There is an exception. Where the caveator holds an interest under a written contract for sale and there is no uncured default, the court shall refuse to remove the caveat unless the case otherwise warrants removal.

In a show cause application, the caveator is asked to explain why the caveat should stay on title. A written contract for sale is the sort of document that can change the outcome, so have it in hand when you speak to a lawyer.

Wrongful caveats and what to do next

Anyone other than the Registrar who files or continues a caveat without reasonable cause is liable to compensate a person who suffers damage. Whether that applies to you depends on the facts.

• Get a current copy of your title and a copy of the caveat.
• Identify who filed it and what interest they claim.
• Check whether you have a contract, such as an agreement for sale, with the caveator.
• Tell your lawyer, real estate agent and lender if a sale or refinance is pending.
• Keep track of dates, especially any notice you serve and the 60-day period.
• Talk to a lawyer before serving a notice or applying to court.

Gather any emails, agreements or payment records that relate to the caveator's claim before you get advice. Having them ready makes it easier to see which route fits your situation and what the realistic timing is.

Frequently asked questions