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Estates & Wills & Trusts

Vesting orders can be appropriate remedy in estates matters

By Kristine Anderson

Vesting orders can be an appropriate remedy in an estate context, particularly in scenarios where fairness demands that a property transfer occur.

The orders originated as an equitable remedy to pass on legal title instead of a traditional legal conveyance of a property. In effect, a vesting order can force the transfer of a property by someone who is unwilling to do so or in situations where the person who is the legal owner is unable to transfer title.

Vesting orders can be used in civil, family, estates and insolvency matters, and is applied for by way of an application on notice to anyone with an interest in the proceeding, property or estate. Generally, the court will determine if it is fair and just to transfer title to the applicant.

The wide-ranging general authority to grant vesting orders is found in s. 100 of the Courts of Justice Act:

"A court may by order vest in any person an interest in real or personal property that the court has authority to order be disposed of, encumbered or conveyed."

Under this section, the court most often will establish its authority to convey the property by way of a legal finding of unjust enrichment or the establishment of a trust. Other statutes or legal documents can also create the authority of the court to grant a vesting order.

The Estates Administration Act (ESA) establishes the court's authority to grant vesting orders in Ontario. Section 9 provides that if real property has not been sold or distributed to the beneficiaries within three years after the death of the testator, the property shall vest in the persons who are beneficially entitled to it. Those beneficially entitled to the property can be a person who received a specific gift of a property under the will or the residual beneficiaries, if there are no specific gifts of property.

Once vested in the beneficiary, they become the owner of the property even if it is still technically registered in the name of the deceased or the estate trustee. After it becomes vested, the estate trustee is limited in what he or she can do with the property.

The ESA also contains a proviso at s. 10, which states that nothing in s. 9 takes away from any direction in the will to do otherwise. Generally, where an estate trustee has the implied or expressed power to sell or convert real property at such times and in a manner as he or she sees fit, s. 10 will trump s. 9.

A will that includes a clause allowing the estate trustee to postpone the sale or to deal with the property as he or she sees fit — as is standard in many wills — could likely oust the automatic vesting provisions of s. 9.

If the court is required to interpret whether there is a clause that trumps s. 9, it will also consider whether the deceased intended for the estate trustee to have the authority to deal with the real property beyond the three-year limitation set out in the ESA.

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