Clearing Liens and Judgments From Title Before an Estate Sale Ontario

You are the estate trustee, a buyer has made an offer on the house, and the title search shows items you did not expect: a mortgage, a lien, or a writ based on a judgment against the deceased. Buyers and their lawyers expect clean title at closing, so these items need attention.

This article explains what these items generally mean, what the facts say about how long writs last, and how a trustee prepares for a sale. The exact steps to clear each item depend on the facts, so a lawyer should confirm them before you sign anything.

What shows up on a title search

A title search lists claims registered against the property. For a deceased owner, these often include a mortgage, a lien and writs of seizure and sale arising from unpaid judgments. How each one must be handled before closing depends on the item, so it is worth confirming with a lawyer.

The writ rules above come from older guidance and court materials, so confirm the current rules and whether a particular writ is still in force. Do not assume an old writ has expired without checking.

The trustee's duty to deal with debts

An estate trustee winds up the deceased's affairs, pays taxes and debts, collects the assets and distributes the residue to those entitled. How a particular judgment debt or lien fits into that, and in what order it is dealt with, depends on the facts and is worth confirming with a lawyer.

In practice, trustees often ask for payout statements from each creditor and arrange payment from the sale proceeds at closing. Whether this works for each item, and what documents the creditor must give for removing a registration, depends on the item. Your lawyer will arrange those details with the purchaser's lawyer.

Getting authority to sell

Probate is normally required if the deceased owned real property that does not pass to another person by right of survivorship. If real property must be sold, a certificate should be obtained before anyone signs an Agreement of Purchase and Sale.

Estates valued at up to $150,000 can use a Small Estate Certificate, and larger estates use a Certificate of Appointment of Estate Trustee. An Estate Information Return must be filed within 180 calendar days after the certificate is received. The estate pays Estate Administration Tax on a certificate applied for on or after January 1, 2020, at $0 per $1,000 on the first $50,000 and $15 per $1,000 on the rest.

If the deceased was a joint tenant, the surviving co-owners inherit the share. Whether that affects how claims against the deceased's share are handled is a legal question to raise with a lawyer.

Practical steps before closing

• Order a current title search and an execution search against the deceased's name.
• List every registration: mortgage, lien, writ or notice.
• Ask each creditor for a written payout figure with a daily interest amount.
• Check the issue and renewal dates of each writ against the six-year periods.
• Confirm whether the property is under the Land Titles Act, since that affects when a writ binds the land.
• Check with the municipality that property taxes are up to date.
• Share the list with the purchaser's lawyer early so requirements are clear.
• Make sure the certificate is in hand before any Agreement of Purchase and Sale is signed.

What to do next

If the estate may be worth less than the debts, how to proceed depends on your situation, so it is worth confirming with a lawyer before you decide anything. An estate that cannot pay everything raises questions about the order of payment and about the trustee's own exposure. Gather the title search, the will, any mortgage statements and every creditor letter, and bring them to a lawyer.

Where nobody eligible can administer the estate, the Office of the Public Guardian and Trustee may apply to act, including where the deceased owned Ontario real estate.

Frequently asked questions