Vesting of Real Property

July 30, 2012 Hull & Hull LLP Executors and Trustees Tags: 0 Comments

Section 9(1) of the Estates Administration Act, RSO 1990, c E. 22 (“ESA”) states:

“Real property not disposed of, conveyed to, divided or distributed among the persons beneficially entitled thereto under section 17 by the personal representative within three years after the death of the deceased is, subject to the Land Titles Act in the case of land registered under that Act and subject to subsections 53 (3) and (5) of the Registry Act, and subject as hereinafter provided, at the expiration of that period, whether probate or letters of administration have or have not been taken, thenceforth vested in the persons beneficially entitled thereto under the will or upon the intestacy or their assigns without any conveyance by the personal representative, unless such personal representative, if any, has signed and registered, in the proper land registry office, a caution in Form 1, and, if a caution is so registered, the real property mentioned therein does not so vest for three years from the time of the registration of the caution or of the last caution if more than one was registered.”

Therefore, according to the ESA, if property remains in the name of the estate trustee or deceased for a period of more than 3 years, granted there is no registered caution, the beneficiaries acquire the right to deal with the property as their own, “whether probate or letters of administration have or have not been taken”.

However, the ability of beneficiaries to rely on this three year provision is limited by s 10, which essentially requires an examination of the will to determine whether any rights are provided to the trustee.  Section 10 reads as follows:

“Nothing in section 9 derogates from any right possessed by an executor or administrator with the will annexed under a will or under the Trustee Act or from any right possessed by a trustee under a will.”

In the case of Caldwell v. LaMothe, [1996] O.J. No. 1179, it was held that where a will contains an express power of sale with no conditions attached, s 9 does not apply.  In Caldwell, Kurisko J. was satisfied that the property in question did not vest in the beneficiaries because the will provided the trustee with “…full power to sell, mortgage or otherwise dispose of the same or any part thereof”.

However, in determining the powers granted to trustees pursuant to a will, consideration must be given to the intention of the testator.  In Proudfoot Estate (Re), [1994] O.J. No. 704, 3 E.T.R. (2d) 283, at issue was whether a Burlington farm vested in the beneficiary after 3 years or whether a power to sell prevented the vesting.  At paragraph 10, the Court, “…reject[ed] the proposition that, wherever there is an express or implied power to sell in a will, lands cannot vest in the beneficiaries pursuant to the [ETA]…one must have regard to the intention of the testator as expressed in the will”.  Carnwath J. went on to hold at paragraph 10, “…nothing could be clearer than the testator’s intention to separate the Burlington farm from the express power to sell and the implied power which can be derived from a direction to pay debts”.  Therefore, although there was a power of sale, it seemed to have not included the Burlington farm.  As a result, the Burlington farm vested in the named devisees.

Ian M. Hull

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