Protecting Your Rights in Real Property and the Family Residence: Certificates of Pending Litigation

Dividing property in a family law proceeding is complex. In particular, the family residence and other real property can be a source of conflict during the breakdown of a relationship. Registering a certificate of pending litigation (CPL) is one way that a spouse can protect their interest in real property during the course of their family law proceeding.

If a family proceeding is not underway, but a spouse still needs to protect their interest in the family residence, they may consider registering a spousal lien.

How to Register a Certificate of Pending Litigation (CPL)?

A spouse can protect their interest in real property by registering a certificate of pending litigation (CPL).

What does a CPL do?

A CPL is a registered charge on the title to a property that gives notice to potential buyers, lenders or creditors that another person is claiming an interest in the property. A CPL functions like a hold on the property, limiting the registered owner’s ability to transfer, re-finance or sell the property.

CPLs may be registered against a property pursuant to the Land Title Act, R.S.B.C. 1996, c. 250, s. 215.

Who can register a CPL and when is it used?

Anyone who is a party in the legal proceeding can register a CPL against a property—not just spouses. However, a CPL can only be registered if two conditions are met; a legal action has been filed in BC Supreme Court and the person registering the CPL has a claim to an interest in that specific property.[1] The property in question must be owned by a party to the litigation. Note that non-spouses and corporations may be parties to a family law proceeding.[2]

If a legal proceeding has not been initiated and a spouse wants to protect their interest in the family residence, they may consider registering a spousal lien.

A CPL can be registered against any real property, it is not limited to the family residence. A CPL may be registered against commercial property or an investment property. However, if the spouse registering the CPL has no interest in the property in question, it would not be capable of supporting a CPL. The Court of Appeal affirmed in Bilin v Sidhu, 2017 BCCA 429 (CanLII), “the existence of a validly registered CPL, as demonstrated by pleadings that support an interest in land, must be a threshold criterion for its continued registration. In other words, CPLs that fail to meet the ‘pre-condition’ set out in s. 215(1) may be cancelled for that reason...”[3]

A CPL may be registered on property that is owned solely or jointly. Absent a CPL, in a jointly owned property, one spouse could transfer or re-mortgage their share of the property without consent of the joint owner.

If a CPL is registered, the registered owner or owners of the property will receive formal notification from the land title office.

Does a CPL expire?

A CPL does not expire, but if no steps have been taken in the related legal proceeding for one year after the CPL was registered, a registered owner, or any party claiming an interest in that property, may apply to court to have the CPL removed.[4]

Applying to Remove a CPL

The individual who registered the CPL, or their solicitor, may cancel the CPL by submitting a written request to the registrar.[5]

If the legal proceeding is discontinued, the registrar must cancel the CPL.[6] A proceeding is discontinued when the party who initiated the claim or application chooses to withdraw their claim.

A CPL may be removed if the related legal proceeding is dismissed. Dismissal occurs when the Court makes an order rejecting the claim or application. In Berthin v Berthin, 2018 BCCA 57 (CanLII), the Court of Appeal affirmed that when an action involving an interest in land is dismissed, the judge may not cancel the CPL immediately. Section 254 of the Land Title Act requires the CPL remain in place until the plaintiff has exhausted all their avenues of appeal.[7]

The exception to s. 254 is the property owner or person claiming an interest in the property may apply to have the CPL removed on the basis it is causing or is likely to cause hardship and inconvenience.[8] Section 256(1) of the Land Title Act sets out:

Cancellation of certificate of pending litigation on other grounds

256 (1) A person who is the registered owner of or claims to be entitled to an estate or interest in land against which a certificate of pending litigation has been registered may, on setting out in an affidavit

(a) particulars of the registration of the certificate of pending litigation,

(b) that hardship and inconvenience are experienced or are likely to be experienced by the registration, and

(c) the grounds for those statements,

apply for an order that the registration of the certificate be cancelled.

If the applicant establishes actual or likely hardship and inconvenience, the cancellation of the CPL isn’t automatic. Section 257 of the Land Title Act provides, in part:

Power of court to order cancellation

257 (1) On the hearing of the application referred to in section 256 (1), the court

(a) may order the cancellation of the registration of the certificate of pending litigation either in whole or in part, on

(i) being satisfied that an order requiring security to be given is proper in the circumstances and that damages will provide adequate relief to the party in whose name the certificate of pending litigation has been registered, and

(ii) the applicant giving to the party the security so ordered in an amount satisfactory to the court, or

(b) may refuse to order the cancellation of the registration, and in that case may order the party

(i) to enter into an undertaking to abide by any order that the court may make as to damages properly payable to the owner as a result of the registration of the certificate of pending litigation, and

(ii) to give security in an amount satisfactory to the court and conditioned on the fulfillment of the undertaking and compliance with further terms and conditions, if any, the court may consider proper.

(Emphasis added)

If actual or likely hardship and inconvenience are established and if the court “is satisfied that an order requiring security to be given is proper in the circumstances and damages will provide adequate relief to the party in whose name the CPL has been registered,” the court has discretion to cancel the CPL, either in whole or in part.[9]

What Constitutes Hardship and Inconvenience?

The Hardship and inconvenience stemming from the CPL must be more than “trifling” or “insignificant”, but the court “should not be ‘exacting’ in its analysis of hardship and inconvenience.”[10]

The applicant must provide the particulars of real hardship and inconvenience experienced or likely to be experienced, not merely general allegations. They must also show the hardship is causally connected to the registration of the CPL.[11]

Examples of hardship and inconvenience include depriving a property owner of investment income and impeding the sale of a property.[12]

The BC Court has found “evidence that a party’s ability to obtain alternative refinancing to avoid default of their mortgage was impeded by the CPL was sufficient to constitute hardship.”[13]

In another case, a CPL was cancelled based on hardship and inconvenience because one spouse could not obtain the financing needed to complete the purchase of her ex-spouse’s interest. Her failure to purchase his interest would necessitate the re-negotiation of their divorce settlement.[14]

Impeding the ability to obtain financing to continue a redevelopment project has been sufficient to cancel a CPL.[15] However, a business or re-development opportunity that is merely speculative in nature is not sufficient.[16]

How do you register a CPL?

In a family proceeding, the claimant must indicate their intention to register a CPL in Schedule 4 of the Notice of Family Claim and specify the property using the legal description.

Complete the CPL in Form 33 listed under “Forms for Manual Filing” on the Land Title and Survey Authority of British Columbia website.

File both the CPL at the court registry along with the notice of family claim. Once it is filed, register the CPL in the land title office where the property at issue is registered.

Priority and Timing of Registration

Depending on the timing of registration, a property interest outlined in a CPL may be lower in priority than other interests. In Elite Mortgage Corp. v Fell, 2020 BCSC 2007, the Court held that where a creditor filed a mortgage after the spouses separated but before registration of a CPL, the creditor’s claim ranked higher in priority than the CPL.[17]

Important differences between a spousal lien and a CPL:

A spousal lien can only be registered against the family residence, or “homestead” as the Land (Spouse Protection) Act describes it. A homestead means a property that the spouses occupied as their residence or a property that the spouses occupied within the year immediately preceding date the application for the spousal lien was made.[18] Conversely, a CPL may be registered against any kind of real property, including commercial or vacation property.

A spousal lien can only be registered if the property is held by one or both of the spouses. A CPL may be registered against property held by one or both of the spouses, or by a third party.

A spousal lien may be registered at any time before the registered owner dies if the registered spouse still resides in the home, or moved out within 1 year. Litigation does not need to be in progress to register a spousal lien. Litigation must be in progress before you can register a CPL.

While a registered owner is typically not notified when a spousal lien is registered, all the registered property owners are notified if a CPL is registered.[19]

Conclusion

Reach out to a lawyer on our team for advice on how to protect your rights in your family property.

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[1] Land Title Act, s. 215(1).

[2] Porter v Porter, 2023 BCSC 2181 (CanLII) at para 45.

[3] Bilin v Sidhu, 2017 BCCA 429 (CanLII) at para 55.     

[4] Land Title Act, s. 252.

[5] Land Title Act s. 255.

[6] Land Title Act, s. 253.

[7] Berthin v Berthin, 2018 BCCA 57 (CanLII) at para 41.

[8] Land Title Act, s. 256.             

[9] Xiao v Fan, 2018 BCCA 143 (CanLII) at para 17.    

[10] Youyi Group Holdings (Canada) Ltd. v Brentwood Lanes Canada Ltd., 2014 BCCA 388 at para 28.

[11] Liquor Barn Income Fund v Becker, 2011 BCCA 141 (CanLII) at para 37.

[12] Zhong v Alan Hu Personal Real Estate Corporation, 2022 BCSC 1964 (CanLII) at para 66.

[13] Treasure Bay HK Limited v 1115830 B.C. Ltd., 2024 BCSC 294 (CanLII) at para 126.

[14] Beach v Beach, 2018 BCSC 2574 (CanLII) at para 35, appeal dismissed, Beach Estate v Beach, 2021 BCCA 238 (CanLII).

[15] Porter v Porter, 2023 BCSC 2181 (CanLII) at paras 97-102.

[16] Porter v Porter, 2023 BCSC 2181 (CanLII) at para 101.    

[17] Elite Mortgage Corp. v Fell, 2020 BCSC 2007 (CanLII).

[18] Land (Spouse Protection) Act, s. 1.

[19] Land Title Act, RSBC 1996, c 250, s. 215(3)