The land titles system faces unprecedented backlogs, causing extensive delays in the transfer of title from one owner to another in the province of Alberta. While the office has experienced delays in the past, currently, the Alberta Land Titles and Surveys Spatial Information System is reporting that it is in the process of registering documents received on February 18 of this year. The office of Nate Glubish, the Minister of Service Alberta, attributes the delays to a substantial increase in real estate activity over the past year. To address the delays, all in-person services at Land Titles Offices have been suspended and registrations may only be submitted online.
The delays are taking a toll on residential and commercial real estate transactions in several ways, including, in some cases, preventing deals from closing on time. Below we will examine the impact of the delays on residential and commercial real estate transactions and various options for managing a real estate transaction in light of the current situation.
What is the Significance of a Transfer of Title?
While much of the stress and work involved in selling or purchasing a property relates to reaching an agreement with the other party, inspecting the property and addressing any resulting issues, and arranging for financing, a deal isn’t considered complete until the title has changed hands from the vendor to the purchaser. This is only done once the province registers a change of the property’s title in the Land Titles system to reflect the new ownership.
Traditionally, keys to the property were exchanged only after the registration was completed to reduce the chance of interim complications, such as a lien being registered on the property after closing a deal but before ownership had transferred to the purchaser. However, delays in title transfer over the years have resulted in a variety of solutions to allow a transaction to close before the change in ownership is officially registered on title.
The Alberta Pending Registration Queue & the Western Conveyancing Protocol
The Pending Registration Queue was established in April of last year to address the increased delays in registering a change in title. The Pending Registration Queue allows real estate transactions to close by eliminating the risk created by deficiencies in documents as well as intervening registrations.
If a document is submitted for registration and is unable to be registered due to a deficiency, for example, if a signature is missing, the Pending Registration Queue provides a 30-day window to allow the party time to correct the document without losing priority in the registration line. Further, the risk of intervening registrations by a third party is eliminated by allowing real estate lawyers to search pending registrations to ensure there are no surprises which could impact registrations that have yet to be placed on title.
The Western Conveyancing Protocol is a set of enhanced conveyancing standards in use in British Columbia, Alberta, Saskatchewan, and Manitoba, that can help a transaction close by allowing for the release of mortgage funds prior to the registration of a change in title. In most cases, a mortgage lender will not release funds to the purchaser’s lawyer until the change in title has been registered. However, the Western Conveyancing Protocol will often allow for the transfer of funds prior to registration. Notably, this only applies to residential real property transactions and not commercial.
Both the Pending Registration Queue and the Western Conveyancing Protocol can assist by providing vendors, purchasers, and lenders with some form of assurance with respect to the transfer of title, allowing the parties to complete some transactions before registration has taken place.
The Increased Importance of Purchasing Title Insurance
To further reduce any risk with respect to title issues between the closing of a transaction and the registration of the title transfer, buyers are encouraged to purchase a title insurance policy when buying a property. Title insurance can cover buyers for costs associated with unexpected issues such as undiscovered liens, encroachments on neighbouring properties, and other potentially costly issues. In some cases, a mortgage lender may require a purchaser to obtain title insurance before authorizing the release of funds to close a transaction.
Title insurance can provide additional assurances to both purchasers and lenders in the event of delayed registration to address any concerns over the potential for an intervening registration on the property’s title.
How Delays Could Impact Property Taxes
The delays in registration have gotten so long that they are beginning to impact the ability of municipalities in Alberta to locate current property owners and invoice them for municipal property taxes. With bills set to go out this month, for payments due in June, there are concerns that they may not reach the correct person in time to avoid late payment fees. To prevent issues with payments and avoid penalties, some cities are encouraging those who have purchased a new home in recent months to proactively reach out to their municipality to enquire about their tax bill and make payment arrangements.
Province Plans Budget & Staffing Increases to Help Ease Backlog
The province allocated over $9 million in the most recent provincial budget to address the delays, which will be spent on nearly doubling the registration staff. Further, the province is looking into technological options to help expedite the examination and registration process. The province expects to implement changes by this summer and hopes that a reduction in the wait times will soon follow.
Calgary Real Estate Lawyers Ready to Help You
Contact the experienced commercial and residential real estate lawyers at DBH Law in Calgary to see how we can help you through your real estate transactions. Our team has more than twenty-five years of combined experience acting for purchasers, lenders, and developers through all stages of residential real estate transactions and in commercial sales, purchases and leasing matters. To find out how we can help you, contact us online or by phone at 403-252-9937.