What is an Action In Passing of Title?
How do you legally define it under Quebec laws?
What are the essential elements you should know!
In this article, we will break down the notion of an Action In Passing of Title so you know all there is to know about it!
Keep reading as we have gathered exactly the information that you need!
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What Is An Action In Passing of Title
In Quebec civil law, an action for the passing of title is a legal recourse where a party seeks to legally enforce the transfer of property title from the seller to the buyer.
For example, Mary is looking to sell her home and John is an interested buyer.
Mary and John enter into a promise to purchase where John offers to buy Mary’s house for $250,000 and Mary agrees to sell.
However, for various and unknown reasons, John refuses to show up to the notary’s office to close the transaction.
In that case, Mary may exercise a legal recourse for the passing of title against John.
If Mary succeeds in her legal action, the Quebec courts will award Mary a judgment to transfer the title to John and get payment.
The Action In Passing of Title can be with respect to a real estate property or a movable one.
In most cases, lawsuits and legal actions are filed in the context of the transfer of real estate property title.
However, the basis and application of this remedy is applicable to both movable and immovable properties.
Legal Basis In The Civil Code of Quebec
Article 1712 of the Civil Code of Quebec represents the legal basis on which an action for the passing of property title can be pursued in court, stating:
Failure by the promisor, whether seller or buyer, to execute title entitles the beneficiary of the promise to obtain a judgment in lieu thereof.
This article is part of Title Two (Nominate Contracts), Chapter I (Sale), and Division I (Sale in General) of the Civil Code.
A “sale” is when a person (the seller) agrees to transfer ownership of property to another person (the buyer).
If the buyer and seller enter into a contract and a party fails to observe its obligations allowing the conveyance of property title, an action to have the courts legally transfer ownership may be viable.
To successfully file an action for the passing of title before the Quebec courts, the plaintiff in the civil suit must demonstrate the following elements:
- Existence of a promise to purchase between the buyer and the seller that is legally binding and enforceable
- Notice of claim to the breaching party requesting that the breaching party sign the deed of sale (although this requirement is not fatal to the recourse)
- The plaintiff must sign and present a deed of sale that is drafted consistent with the terms of the promise to purchase
- If the plaintiff is the buyer, it must either deposit the sums required for the purchase in the records of the court or demonstrate it has the capacity to pay
The non-breaching party must file suit within a reasonable delay following the breach of the other party.
Typically, the courts will consider the facts of the case to better understand the dynamics between the buyer and the seller.
The courts will be interested to know if in fact there was a valid and binding promise to purchase regarding the property in question and whether the plaintiff observed its obligations in favour of the defendant.
There are instances when a party’s breach to observe the terms of a promise to purchase (to convey title) cause damage to another party.
In the case Kenneth Haroon v. Michel Proulx, the Quebec Superior Court rendered a judgment where not only it accepted the plainitiff’s action to transfer title but also condemned the defendant to damages.
In essence, the plaintiff was able to demonstrate the further to the defendant’s breach of contract, the plaintiff suffered the following damages:
- Notary fees
- Banking fees
- Interest on mortgage
- Property maintenance fees
- Fees to send notice of claim
The defendant was ordered to provide compensatory damages to the plaintiff as a result.
- Transaction fees
- Notary fees
- Banking fees
- Mortgage penalty fees and interest
- Loss of opportunity
- Loss of profits
- Property maintenance fees and management
- Brokerage fees
- Advertising fees
- Troubles and inconveniences
- Legal fees (if the other party’s actions were abusive)
Article 1611 of the Civil Code states that “the damages due to the creditor compensate for the amount of the loss he has sustained and the profit of which he has been deprived”.
Also, “future injury which is certain and assessable is taken into account in awarding damages”.
Sale To A Third Party
It’s important to keep in mind that a lawsuit filed to enforce the transfer of title further to a legally binding promise to purchase is enforceable between the contracting parties.
If the seller refuses to transfer title to the buyer and turns around and sells the same property to a third party (in good faith) in a second contract, the initial buyer would not be able to seek the nullity of the “second” contract or seek that the second buyer convey title to the first buyer.
Considering a promise to purchase is a bilateral contract between a buyer and the seller, the contract, in of itself does not convey title.
You need the seller to actually convey title to the buyer through the notary.
In the event the seller does not sell to the original buyer and sells it to a third party in good faith, the original buyer will no longer have a recourse against the seller for the transfer of title but can claim damages.
If the third party who bought the property was in bad faith (or knew that the seller was selling the property in violation of the terms of a binding contract it has signed), extracontractual recourse may be exercised against the third party as well.
In the event of a dispute between the buyer and the seller relating to the transfer of property ownership, it’s possible for the plaintiff to publish a pre-inscription notice in the land registry to temporarily prevent the seller from transacting title on the property.
The pre-inscription notice can be published in the land registry provided that the seller still owns the property and a sale was not recorded on the property.
You do not need to get a prior authorization from the court to publish such a notice on the land registry.
Once published, it will have a retroactive effect and will have the same legal effects as a seizure before judgment.
Action To Convey Title Takeaways
So what is the legal definition of Action In Passing of Title?
Let’s look at a summary of our findings.
Action In Passing of Title
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