What a tangled web it currently is when Ontario real estate lawyers attempt to register transactions involving real property held in trust. The electronic registration system (“e-reg”) in Ontario has seemingly relevant and valid boxes to tick to reflect the true nature of what is intended to transpire. However, the present Director of Titles’ perspective regarding trusts is at odds with the system and practice standards that have developed since the implementation of the e-reg system, not to mention the law.
It is uncontroversial to state that interests in real property can be held personally and in trust under Ontario law. Where a trust is involved, the trustee or trustees hold legal title to the property that is the object of the trust, with the beneficiaries having a beneficial interest. This is all fine and well as an intellectual exercise, but title needs to be accurately reflected in the government’s land registration records. Further complicating matters is the fact that Ontario has two systems: registry and land titles, with the former being phased out due to the move to electronic registration. The goal of the land titles system and e-reg is a more reliable record of title.
The registry system is what is referred to as a notice system. This means a wide range of information related to title can be deposited and recorded in the registration system. Unfortunately, this made title searching very cumbersome and potentially prone to error. By contrast, the land titles system represents the actual chain of title and, therefore, is not a notice system. As a result, there are more stringent restrictions about what can be registered on title and how information related to title can be recorded in the registration system.