The Writ Registry. By Conrad Hadubiak and Michael Phillips MacPherson Leslie & Tyerman LLP

Transcription

1 THE WRIT REGISTRY These materials were prepared by Conrad Hadubiak and Michael Phillips, of MacPherson Leslie & Tyerman law firm Regina, Saskatchewan for the Saskatchewan Legal Education Society Inc. seminar, Legal Issues Update on the New LandSystElIn; June

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3 The Writ Registry By Conrad Hadubiak and Michael Phillips MacPherson Leslie & Tyerman LLP A. Introduction One of the general principles of the LAND project that resulted in the adoption of the LTA 2000 was the continuation of Land Titles as a public program that met the needs of continuity, quality, consistency and neutrality, as well as other public policy goals, such as debt collection and maintenance enforcement. The development of Part 18 of the LTA 2000 and the implementation of the Writ Registry represent the realization of those principles. Part 18 of the Land Titles Act 2000 represents a significant shift in the procedural law dealing with writs of execution and maintenance orders that affect land. The development of the Writ Registry, which went into force on June 25, 2001 across the province, now provides the mechanism through which execution creditors can realize against land. The implementation of the Writ Registry should result in greater efficiency in the province's judgment enforcement process. Use of an automated system to record writ registration brings the procedures available to unsecured creditors more in line with those available to secured creditors under the Personal Property Security Act and the Personal Property Registry. The new land titles system also removes administrative burdens from the judgment enforcement process. Under the old legislation a writ of execution could only affect land of the debtor within the land registration district in which the writ was registered. Under the LTA 2000, a writ or maintenance order need only be registered in one place, and is effective ) across the province.

4 B. Interests A key concept in the mechanics of the new system is that of an "interest" in land. Section 2(1)(s) defines an "interest" as any right, interest or estate, whether legal or equitable, in, over or under land recognized at law that is less than title. Generally, registrations against titles now fall under the broad scope of the "interest" concept, though there are different types of interests. Section 50 (1) provides that an application for registration of an interest may be submitted only if the interest, at the time of the registration, is recognized at law as an interest in land, or registrable pursuant to any other Act or Act of Parliament, or designated as a registrable interest in the regulations. Since writs and maintenance orders are registrable pursuant to other Acts (ie. the Executions Act and the Enforcement ofmaintenance Orders Act), they are eligible for registration in the land titles registry. The section seems to suggest that registration of an interest based on an instrument cannot occur prior to valid execution of the underlying document. This view is confirmed by section 54(4), which provides that an interest cannot be perfected after registration. Thus, unlike security interests under the PPSA, the holder of a writ or maintenance order cannot register prior to obtaining judgment or issuance of the document and then claim priority on the basis of the earlier registration. Section 50(2) of the new Act provides that interests can be registered against titles and against other interests. For example, a lease may be mortgaged. The lease is an interest registered against title, and the mortgage is an interest registered against the lease. Section 50(4) provides that when the lease is expires, lapses, or is discharged from the land titles registry, the interest based on the mortgage is also removed from the registry. 2

5 c. Registration 1. General Requirements Section 54(7) provides that registration of a writ or maintenance order in the land titles registry must include, as an attachment to the application, any form prescribed by the relevant statute in order to be effective. Section 31 of the Executions Act provides that an execution creditor may register the writ in the Personal Property Registry in accordance with the requirements of the PPSA. Section 98 of the Land Titles Regulations, 2001 provides that the requirements for registration of a maintenance order or writ of execution are to be done in accordance with the procedures of the PPSA and its Regulations. Thus, the Personal Property Security Act and Regulations govern requirements of form. Similar to the PPSA, the LTA 2000 contains a mechanism in section 57 through which interested parties may request an interest holder to disclose the instrument on which the interest is based. This is likely of little use to competing third parties, since under section 54(5) they are not bound by any terms of the instrument that are not disclosed in the registry. However, unlike other interests such as leases and mortgages, there is nothing specific in the act requiring disclosure of the document underlying the registered writ or maintenance order. As previously noted, the only requirement is the use of a form prescribed by the statute that creates the interest. Section 54(2) provides that registration of an interest constitutes notice to third parties and confers priority over those parties in accordance with section 27 of the Act. Section 54(8) provides that, with respect to writs and maintenance orders, the priority of the interest is determined to the extent defined in the Act that created the interest, regardless of ) whether an attachment is provided, as long as the prescribed form is provided in the registration. 3

6 Section 27 provides for a first-in-time notice registration priority scheme according to the time of registration at the land titles registry. It is important to note that, pursuant to section 2.3 of the Executions Act, all writs of execution must now be registered against both goods and lands. This allows the writ to be registered in the Personal Property Registry, which is essential to the operation of the Writ Registry. In contrast, maintenance orders registered in the Writ Registry maintain their effectiveness against land, but do not affect personal property in the Personal Property Registry. 2. Mechanics The new Act provides a distinction between an interest register number and an interest number. The interest register number is a "group code" that the interest points to, regardless of the number of titles or interests affected, while the interest number is the number assigned to the interest as it affects a single title. For example, if an interest such as a mortgage is registered against three titles, there is one interest register number and three interest numbers. The distinction is significant for the discussion ofdischarges ofinterests discussed lateron. Pursuant to section 170(1) of the new Act, a writ of execution must first be registered in the Writ Registry, which is designated as the Personal Property Registry pursuant to section 161. Once the writ is registered in the PPR, it is automatically copied to a database that acts as the Writ Registry on a regular basis. Updates of the registry occur ever 30 minutes. Once registered in the Writ Registry, the writ will be assigned a PPR registration number. Section 2.3 of the Executions Act provides that a writ of execution against goods and lands binds lands in accordance with section 26. The sheriff is directed under that section to 4

7 register the writ in the Writ Registry if it has not already been registered, and to register the writ in the land titles registry if directed to do so by the execution creditor. Section 26(2) provides that it need not be the sheriff that registers the writ in the Writ Registry in order for the writ to bind future titles or interests of the debtor, though that will usually be the case. However, the sheriff must carry out seizure of a mortgage pursuant to section 11 of the Executions Act, even though the steps of registration of the writ in the Writ Registry and the land titles registry are the only requirements to effect seizure. 3. Auto-Attach and Request-Attach Auto-attach and requested attach are the two ways in which an interest based on the writ can attach to the debtor's title or interest in land. If the judgment debtor is not the registered owner of land or an interest in land at the time the writ is issued, the writ cannot affect an interest in land even though it is registered in the Writ Registry. Even if the debtor has an unregistered interest in land the writ will not be effective, since section 172(2) suggests that the relevant time for determining priority is when the-writ is registered against the debtor's interest in the land titles registry. Date of issuance of the writ, submission to the Writ Registry, time of registration in the Writ Registry, and time of application for registration of an interest based on the writ to the land titles registry are all specifically excluded as the basis for priority. As a result, any subsequent buyer or mortgagee takes free of a writ registered only in the Writ Registry. Thus, a buyer or mortgagee that is unconcerned about writs attaching to their own interest only need to searchthe land titles registry in orderto ensure they take priority over a writ. Registration in the Writ Registry allows a creditor to take advantage of the auto-attach function of the new system. If a title or interest is being transferred to a name identical to the 5

8 name on a writ or maintenance order, the writ or maintenance order will automatically attach to the newly-acquired interest. Section 172(1) of the Act provides that any title or interest subsequently registered in the land titles registry in the exact name of the debtor must include and be subject to the registration of an interest based on the writ. For the auto-attach function to apply, there must be a character-for-character match between the name in the Writ Registry and the transferee's name as it appears in the land titles registry. Since the Writ Registry became effective for the province on June 25, 2001, the process of conversion of the land registration districts allows writs to attach to land converted following the registration of the writ in the Writ Registry. Although registration in the Writ Registry alone does not confer priority, when performing the auto-attach function the system will ensure that the writ is the first interest registered against the debtor's new title or interest. Further, with respect to priority of multiple writs or maintenance orders registered in the Writ Registry and subject to auto-attachment, section 183 of the Act provides that they are to be registered in the land titles registry based on the order oftheir registration in the Writ Registry. The second way in which a writ or maintenance order can attach to a title or interest in land is through the requested attach function. Whereas the old system imposed an obligation on the registrar to check the general record before accepting instruments for registration, the new Act imposes the search obligation on the judgment creditor. If the judgment debtor is the registered owner of land or an interest in land when the writ is issued, the judgment creditor may apply to have the writ registered against the title or registered interest of the judgment debtor. The system will not automatically apply the interest to any title or interest in the debtor's name existing at the time the writ was registered. However, the writ or maintenance order must first be registered in the Writ Registry. It is not required that the name of the debtor as it appears on a 6

9 title or interest registration be an exact match of the name of the debtor as included in the Writ Registry registration. In order to execute a registry search for the purpose of attaching a writ or maintenance order, the relevant forms must first be downloaded, including a Land Registry Packet Cover Page and an application for writ or maintenance order registration. Search the titles through a quick search, using a search that includes names that are similar in spelling. In the Application for Writ or Maintenance Order Registration form, complete the Application Sequence Number and Application Sheet Count fields. Next, complete the Writ Registry number, which is available from the Personal Property Registry Verification Statement, or through performing a Writ Registry search. Next, check the box for Type Writ, then enter the relevant title or interest numbers to which the writ is to attach. Finally complete the packet cover page. In order to submit the forms, attach the packet cover page to an first, followed by the applications in the correct order, with supporting documents, followed by any attachments, which are announced by a Begin Attachment Sheet. The subject line of the should read Packet # (the nine-digit barcode packet number). It should be pointed out that since the conversion process for each land titles district takes several months, a search could be conducted while the district is being converted, but not until a district is completely converted will a search indicate all land owned by the debtor in the former district. In order to make proper use of the system, it is necessary to take several steps upon obtaining a judgment. First, a writ should be registered in the Writ Registry by registering it at the Personal Property Registry. Next, an advanced search should be conducted against the name of the defendant and any similar names. Finally, if there is an interest or title in the name of the ) defendant, the writ should be manually attached to that title using the process previously 7

10 outlined. Pursuant to section 173, after attachment of the writ through the auto-attach or requested attach methods, the writ binds and forms a lien and charge on the land included in the title or on the supporting interest. 4. Summary Discharge In searching the land titles registry for names similar to the judgment debtor, it will likely be quite common for a writ or maintenance order to be registered against the interest of someone with the same or similar name who is not in fact the judgment debtor. Following registration of the writ or maintenance order in the land titles registry, The LAND Registry sends notice of the interest registration to the title owner or interest holder. Section 175 of the Act provides a summary discharge procedure where the owner or interest holder is not the judgment debtor. This section represents an attempt, embodied in sections 88 and 180(8) of the old Act, to balance the rights of execution creditors and innocent 3 rd parties. In fact, the summary discharge procedure is similar to the former section 88 procedure allowing the registrar to determine the validity ofcertain writs through affidavits of identity. Section 175 provides that on receipt of an application for discharge of an interest based on a writ, the registrar may discharge the registration from the land titles registry where the person making the application satisfies the Registrar that he/she is not the judgment debtor. Section 44 of the Land Titles Regulations, 2001 provides that an affidavit of identity must be filed on an application for summary discharge. In order to effect a summary discharge, the affidavit form, along with a Land Registry Packet Cover Page and an Application to Discharge Interest must be submitted. The Affidavit of Identity is similar to the affidavit an innocent third party would swear under the old system. The Application to Discharge Interest is completed by 8

11 filling in the Application Sequence Number and Sheet Count fields. The Interest Register Number and Type fields are completed by referring to the notice sent by the LAND registry. Finally, the Packet Cover Page must be completed, and all forms submitted to the LAND registry. D. Partial and Total Discharge Writs and maintenance orders may be discharged from the land titles registry without being discharged from the Writ Registry. Partial discharge refers to the situation where a writ or maintenance order is registered against multiple titles or interests and is discharged with respect to one or some of them. Total discharge refers to removal of the writ from all titles and interests to which it is attached. Section 66 of the Act requires that an interest be discharged by the interest holder not later than 30 days after the obligations on which the interest is based have been performed, or the interest has ceased to exist by operation of law. Section 43 of the Land Titles Regulations, 2001 provides that an application for partial or total discharge must include an authorization for each interest holder of the interest to be discharged. A further requirement in section 43(2) of the Regulations requires written authorization by the Director of Maintenance Enforcement in order to discharge an interest in the land titles registry based on a maintenance order. In order to effect a discharge from the land titles registry, an Interest Authorization form must be submitted along with an Application for Interest Discharge and a Packet Cover Page. Discharge of an interest based on a writ of execution may also occur by expiration of time. Section 26(7) of the Executions Act provides that a writ ceases to bind or affect any interest of the debtor after ten years from the date ofjudgment. Section 55(2) of the Act provides ) that registration of an interest pursuant to any Act is effective for the period set out in that Act. 9

12 Section 55(3) compels the Registrar to discharge a registration of an interest on the expiry of that registration. At the expiry of the interest based on the writ, it is erased from both the Writ Registry and the land titles registry without any action on the part of the interest holder. Section 174 of the Act provides the authority for withdrawal of a writ from the Writ Registry. Section 174(4) provides that withdrawal of a writ from the Writ Registry results in removal of any interest based on the writ registered in the land titles registry. Section 100 of the Land Titles Regulations, 2001 stipulates that removal of a writ from the Writ Registry is accomplished by filing, in the form required by the Personal Property Registry, an application for discharge from the Writ Registry. Any person authorized to do so may accomplish removal of a writ, but section 102 ofthe Regulations requires the Director ofmaintenance Enforcement to file a discharge for a maintenance order. It is important to note that a writ will be registered for the life of the writ only, and will be automatically discharged on expiration unless it is renewed. E. Searches of the Writ Registry Searching the Registry by the name of the debtor is likely the most common search criterion. To broaden the search, it is possible to request searches of names similar to that of the debtor, or use wildcards that use an asterisk in the place of a character in the debtor's name. Additional criteria available for searching include the Writ Registry number as well as the old land titles registration number assigned to the writ under the old Act. Section 165 of the Act indicates the authority given by the land titles registry to printed search results, which are proof, in the absence of evidence to the contrary, of the contents of the results. It should also be noted that section 65 of the Regulations provides a procedure for certification of a printed record of the 10

13 Writ Registry. Certification is possible where the Registrar signs, seals, and dates the printout, or where the document is printed on security paper of the land registry. F. Loss of the General Record Under section 31 of the old Land Titles Act, the registrar was compelled to keep a general record of instruments relating to particular persons but not to any described land. The general record was a collection of information that was "filed" rather than "registered" because, by their nature, the instruments could not contain a description of the land. Thus, the general record was the function of a manual system of registration that contained 872,000 titles, which made it impossible to search land by the owner's name. Pursuant to subsection 180{5) and subsection 130(3) of the old Act, the registrar was compelled to check the general record before issuing a certificate of title and before registering any instrument executed by the registered owner. The automation of the land titles system relieves the registrar of these obligations by making it possible to search titles by name and thus determine whether a particular instrument affects a parcel of land. The Writ Registry also eliminates the general record certificate available pursuant to the authority of section 22 ofthe old Act. This document was commonly used in foreclosure proceedings for the purposes of determining which parties had an interest in the equity of redemption. Under the new system, it is still possible to obtain manually certified writ search results. However, issues arise as to whether any use can be made of such a document in light of the auto attach and requested attach functions ofthe Writ Registry. The general record certificate available under the old legislation was a function of the registrar's duty to examine the general record in relation to new transactions. Under the new system, the auto attach feature 11

14 eliminates these duties through automatic registration of the writ in the land titles registry where the debtor name is an exact match to an interest in land. The requested attach feature imposes an obligation on the registering party to identify those parcels of land in which the execution debtor has an interest. If an execution creditor has the ability to specifically register a writ against a title, it is arguable that there is no room for a certified writ search result since all relevant information should already be before the Court. The onus is on the execution creditor, not the registrar, to ensure that the writ is properly registered against the debtor's interest in land. G. Due Diligence and the Lawyer's Role, The Writ Registry, especially the manner in which the Auto-Attach and Request-Attach features operate, create new issues for lawyers acting for execution creditors. For example, if a lawyer has acted for a creditor in obtaining a judgment and writ of execution before the creation of the writ registry and the judgment remains outstanding, does the lawyer have any obligation to undertake request-attaches ofthe writ against land that is registered in the name of the execution debtor but does not result in an auto attach? If the lawyer fails to undertake request-attaches of the writ and the execution debtor subsequently transfers land free of the writ, has the lawyer acted negligently? These and other questions will undoubtedly be the subject of debate or even litigation as the time passes. In the writers' view, a lawyer's obligation to existing clients who are execution creditors is to explain, preferably in writing, the effect of the changes to the writ registry and to advise the client that unless certain conditions are met (i.e. exact name match) or certain steps are taken (i.e. request-attach), the execution debtor may be able to transfer land without regard for the existing writ of execution. The lawyer should advise the client of the costs that will be 12

15 ) incurred should the client request that the lawyer undertake the steps necessary to conduct searches and perform any required request-attaches. The lawyer should conclude the advice by stating that no steps will be taken on behalf of the client unless the lawyer receives specific instructions. It may even be advisable to have the client sign a duplicate copy of your letter and return it as confirmation of instructions. When a lawyer is acting for a client who is looking to obtain a writ of execution after June 25, 2001, it is important for the lawyer to advise the client that for the writ registry to work most efficiently it is necessary to have an exact match for the execution debtor's name. The lawyer should advise the client that aliases are important and should be included in the style of cause of the action whenever they are known. If the client subsequently becomes aware that the execution debtor is using an alias, he or she should understand that this information should be provided to the lawyer with instructions to do a request-attach in respect of any land registered in that name. The lawyer should impress upon the client that failure to provide all aliases may result in the execution debtor dealing with land without having to deal with the writ of execution. Taking the time to accurately inform the client of the effect of the writ registry including the risks that arise from failing to have an exact name match and seeking instructions to do request-attaches where necessary will, in the writers' view, meet the standard of care expected of a lawyer when acting for an execution creditor. Ifthis is done, it should not be necessary for lawyer's to constantly monitor the files of their execution creditor clients to ensure that requestattaches when appropriate. 13

16 H. Conclusion The creation of the Writ Registry must be considered as a significant advance for execution creditors. Whereas under the old system, a writ would only effectively bind the land located in the Land Titles Office where the writ was registered, a writ now may attach to land located anywhere in Saskatchewan. This results in a significant cost and time saving for creditors. The challenge arising from the requirement of exact character for character name matches can be overcome by well-informed execution creditors and attentive lawyers. On balance, the Writ Registry is a very positive development for the judgment enforcement process in Saskatchewan 14