There are indeed several unexpected things that can go wrong at the last minute.
Most of the time, they will arise by reason of a secured creditor enforcing their rights. Determining who has a registered mortgage is a wise step at the outset, particularly if the vendor appears to be under financial pressure.
So, the risk is not usually with the first mortgagee, it’s likely to be the second or third who at the last minute will throw in the “monkeywrench”.
There can be other secured creditors as well who have some other form of collateral security.
Those with interests under the Personal Property Security Act could seize some chattels you thought had been sold as part of the deal. This could include the furnace. That lien usually runs around $10,000.00.
In addition, executions can surface. Someone may have an unpaid fine as a driver in Florida only to find that the Judgment has been transferred here, and an Execution filed in the appropriate Land Registry. It could also be from a lawsuit somewhere else in Ontario. The Ministry has authority to file liens for unpaid child and spousal support. These claims can all arise at the last moment, because there has been a race against time to get them done.
Business loans can result in collateral liens. It’s not uncommon for the secured creditor to have the ability to appoint a Receiver or Manager. They may not wish to interfere with the sale, but they may claim all the proceeds, including an entitlement to be paid in priority to the real estate agents.
The Canada Customs and Revenue Agency has special powers with respect to liens. So, there may not have been prior notice of their interest.
We also have the relative late filing of a Construction Lien. That can occur up until 45 days after the date the last work was done. If the contractor misses the date, they will often go back, attend to some small item requiring repair or replacement, and then file the lien.
Courts can issue injunctions, but they would be rare cases. Where there is a claim to intervene or interfere with the transfer, there is a requirement for substantial grounds, including the requirement that damages would be an insufficient remedy.
In a lawsuit, if it involves the property itself, that is, perhaps a former buyer, such a party may make application to court for an order to issue a “Certificate of Pending Litigation”. The registration would prevent the transfer.
Probably, the quickest remedy for someone who wished to prevent the sale, would be to place the seller in bankruptcy. That means the seller can’t sign the Transfer, only the Trustee in Bankruptcy is allowed.
So, there are quite a few things that can go wrong at the last moment. Best to be cautious and know about them in advance!
Brian Madigan LL.B., Broker