chapter 2 assurance fund

Question 1

Sharon, the registered fee simple owner of Whiteacre, sold her interest to Anne. Anne did not register the transfer she received from Sharon. Some months later Sharon discovered that she was still the registered owner, so she “sold” the property again to Myron, who registered his transfer. Myron did not know about Anne’s purchase and paid market value for the property. Anne has now discovered what has happened. Which of the following statements is TRUE?

1. Anne is the rightful owner of the property and she can have Myron re¬moved from the title.
2. Although Anne cannot remove Myron from the title, she has a valid claim against the assurance fund.
3. Myron’s title is indefeasible because he purchased bona fide for value from the registered owner.
4. Both (2) and (3) are true.

Answer 1

Correct Answer: 3

Myron cannot be removed from the title because he bought in good faith for valuable consideration from the registered owner. Anne cannot claim against the assurance fund because she negligently failed to register her interest. Pursuant to section 294.6(f) of the Land Title Act, the assurance fund is not liable to compensate a claimant for the proportion of the loss caused by their own neglect.

Question 2

In which of the following situations would someone have a successful claim against the assurance fund?

1.Black owns Whiteacre. Mary forges a transfer to herself, registers it and then obtains a bank loan for $50,000 giving a mortgage of Whiteacre as security.

2. Bob owns Blackacre which is worth $1 million. Martin forges a transfer to himself, registers it and then sells the property for $1.2 million to Jim who registers the property and is unaware of the fraud. Upon completion of the sale to Jim, Martin disappears and cannot be found.
3. Gerald, the owner of Greenacres, gives a life estate in his property to his companion Jasmine. Subsequently, Jasmine sells her life estate to John. All necessary documents are registered in the land title office. In a fit of rage Gerald kills Jasmine to get his property back.
4. In all of the above situations a successful claim against the assurance fund might be brought.

Answer 2

Correct Answer: 2

Option (1) is incorrect because the bank did not deal with the true registered owner. According to the Gill v. Bucholtz case, Black would have his title restored, and the mortgage would be struck from title. In Option (3), John=s life estate expired with Jasmine. While criminal charges would presumably be brought against Gerald, John has not lost an interest because of the provisions of the Land Title Act; therefore, no claim against the assurance fund may be made.

Question 3

Kevin is the registered fee simple owner of Orangeacre. David forged a transfer of the fee simple from Kevin to himself and registered the transfer. David then approached ABC Trust Company and arranged a mortgage of Orangeacre. ABC advanced $100,000 to David and registered its mortgage against Orangeacre. Kevin has just discovered what has occurred. Which of the following is TRUE?

1. Because David forged the transfer of the fee simple to himself, Kevin can have David removed from the title.
2. ABC is entitled to its mortgage because it dealt with the registered fee simple owner of Orangeacre.
3. ABC can successfully claim against the assurance fund for money to satisfy the mortgage.
4. All of the above

Answer 3

Correct Answer: 1

Because David obtained title to Orangeacre through fraud, ABC did not receive a valid interest. ABC is not entitled to claim against the assurance fund because it never held a valid interest. Kevin can remove David from title according to Gill v. Bucholtz.