Estates & Wills & Trusts, Real Estate

Beware of 'zombie deeds'

By Kirsten McMahon, Associate Editor

Without administrative changes to the land registration system, the government has no way to determine the intent of the transferor, Toronto real estate and wills and estates lawyer Lisa Laredo tells

Jeffrey Lem, Ontario’s director of titles in the Ministry of Government and Consumer Services, recently announced that a deed to a property can’t be registered after the owner’s death, the Toronto Star reports. Lem calls these ‘zombie deeds.’

Laredo, principal of Laredo Law, says there are two separate issues with so-called ‘zombie deeds.’ Sometimes it can happen in a situation where an unconditional and irrevocable deed is given from one person to another with the intention that it be registered immediately. However, the grantor dies prior to the registration process.

“Does it transfer title and can it be registered after death? A 2015 case says it transfers title immediately upon delivery and can be registered after death,” Laredo says.

However, she says when a deed is given from one person to another with the intention that it not be registered until after the death of the grantor it could be an attempt to avoid payment of the province’s 1.5 per cent Estate Administration Tax.

“Is this type of deed unconditional? I would argue it is conditional upon the death of the grantor and is not intended to immediately transfer title,” Laredo says.

“As a conditional grant, it is revocable at any time prior to the death of the grantor, therefore, it is intended to take effect only after the death and is a testamentary disposition.”

Testamentary dispositions need to conform with the requirements of the Succession Law Reform Act (SLRA), she says, which includes that it needs to be in writing and witnessed by two people.

“If the deed was executed prior to the implementation of electronic registration, it probably doesn’t meet the formal requirements of a will,” Laredo says. “In the era of e-registration, there is no such thing as a written deed delivered to the transferee. There’s no way to satisfy the requirements of the SLRA by an electronic deed.”

She says the ministry's refusal to allow registration of a deed after the death of the transferor is “correct in law,” but only where the deed was intended to operate after the death of the transferor.

“Where intended to be registered prior to death but not presented for registration until after, a deed in paper form may still be legally registrable,” Laredo says. “A deed in electronic format may not be legally registrable because it technically can be revoked by the click of a computer key."

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