Toronto Estate Lawyer : Hull & Hull Law Firm : Trust Mediation and Succession Planning : Serving Ontario, Ottawa, Mississauga, Hamilton

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Eighty years ago, at the height of the Great Depression, a wealthy Ohio businessman hid $182,000 in minted $50 bills in a wall in his house.  There it hung peacefully by a wire in a green metal lockbox, disturbed only by inflation.  A contractor discovered the money while tearing down the wall, and he honestly and very admirably informed the home owner. 

Unfortunately, things spiralled out of control.  First, the home owner and the contractor were unable to agree on a division of the money.  She offered the contractor 10%, he asked for 40%.  Then the story made it into Cleveland's local news, and the estate of Patrick Dunne, the guy who hid the money, got involved (Patrick Dunne had 21 descendants).  The dispute went to litigation. 

For various reasons, the home owner dropped her claim.  However, the county court probate magistrate ruled that $157,000 was clearly marked as Patrick Dunne's property and therefore was the property of his estate.  Of the remaining $25,000, the judge recommened the estate receive 83.3% and the contractor receive 13.7% - approximately $3,400. 

CBS News produced an interesting podcast of the legal issues, posted here.  More food for thought: $182,000 in 1930 is the equivalent of $2,384,341.68 according to the Bureau of labor Statistics inflation calculator.  Of course, some of the rare bills are worth up to $500,000 to collectors...

There are a lot of lessons here.

Have a great week,

Chris Graham

 

 

 

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Listen to Asset Particulars

This week on Hull on Estate and Succession Planning, Ian and Suzana talk about the importance of keeping track of asset details.

Comments? Send us an email at hullandhull@gmail.com, call us on the comment line at 206-457-1985, or leave us a comment on the Hull on Estate and Succession Planning blog.

 

Asset Particulars - Hull on Estate and Succession Planning Podcast #98

Posted on February 5^th, 2008 by Hull & Hull LLP

 

Suzana Popovic-Montag:  Hi, and welcome to Hull on Estate and Succession Planning.  You’re listening to Episode #98 of our podcast on Tuesday, February 5^th, 2008.

 

Welcome to Hull on Estate and Succession Planning, a series of podcasts hosted by

Ian Hull and Suzana Popovic-Montag, that will provide information and insights into estate planning in Canada, from the offices of Hull Estate Mediation in Toronto, Ontario, Canada.  Here are Ian and Suzana.

 

Ian Hull: Hi Suzana.

 

Suzana Popovic-Montag: Hi there Ian, how are you today?

 

Ian Hull: I’m just great.

 

Suzana Popovic-Montag: That’s good.

 

Ian Hull: So just as a reminder, we have set up easy to get access to our daily podcasts and blogs. Go to hullandhull.com for that, but we’ve also set up a call-in line.

 

Suzana Popovic-Montag: And what we’re hoping to do is to hear from you there at area code 206-457-1985.

 

Ian Hull: So we encourage it and hopefully we’ll get some people interacting in this over the weeks to come.

 

Now we’ve been working through and looking at questions of really, estate administration techniques that we can help assist our lawyers and assist ourselves in the process of trying to work through an estate administration. And of our checklist or things to do in getting things organized before we pass away, one of the things that I keep harping on is trying to keep a running total of your assets and so on. But let’s spend some time today talking about particulars of what we want to have on that list.

 

Suzana Popovic-Montag: One of the things that I certainly encourage people to keep a list of, Ian, is their insurance policies. Things like insurance on their vehicles, on their home, on their personal belongings, so that these things are put into one place or are easily accessible or at least, you know, you have an opportunity to know that you’ve found everything that you’re actually looking for.

 

Ian Hull: And that… can be very important. One of the things that people forget is that just because you paid the premium doesn’t mean that the insurance company is going to pay the claim. And you need the policy. This is particularly important with life insurance as well. It’s best to have the policies located in one single spot or easily found in some way, shape or form so that it takes a lot of the burden off your executor when the time comes that they have to move quickly. For example, if you’ve got a car and you don’t know whether or not it’s insured, that’s going to be an urgent issue that you have to deal with.

 

Suzana Popovic-Montag: And certainly when you’ve got real estate, there are situations where the death of the owner of the insurance policy is going to affect whether or not that insurance company will continue to insure that asset. And so you want to make sure that if there is the requirement for some vacancy permit or something like that, that the insurance company is notified of the change in circumstances so that the insurance does continue to be effective.

 

Ian Hull: One of the questions that people often ask is, “What do we do with the house now that it is unoccupied if the person has passed away?” And it’s a case-by-case answer and it depends on almost every situation. It depends on the insurance company itself but typically what an insurance company will say is, ‘we don’t want to continue to insure a house that is vacant except if you’ – and then this is where it is case-by-case – ‘except if it is properly being monitored.’ And they’ll often say, ‘we want to make sure there’s first of all there’s maybe a security system in place.’ Another idea that often they say is, is that you guarantee that you’ll check it every day. That way you can preserve the property in the interim while you’re going to get it ready for sale or distribution to the beneficiary but at the same time keep it well insured.

 

Suzana Popovic-Montag: And just in terms of being well insured, I think that just sort of tweaks me to the fact that if the personalty, or the things that are within the house, that are valuable had otherwise been included in the value of the home for the purposes of insurance and now those things are no longer there, then you want to make sure that what you do have in place is adequate insurance for the house.

 

Ian Hull: Okay.  So let’s talk just more about this real estate and how…we’ve talked about the insurance aspect…but how we deal with real estate generally.

 

Suzana Popovic-Montag: And what I think of in these situations when we’re dealing with a piece of property is the real estate taxes that are either outstanding up until the date of death or will have to be paid on a go forward basis.

 

Ian Hull: And then, as you say, the contents of the house and the valuables and so on, you’ll want to make sure they’re well insured. But you also need to take control and custody over them in some way, shape or form. And so what I often tell my clients is that…go through the house and bring a video camera and video everything in the house - every room, every piece of furniture - so that at the other end of the day if someone says, “Geez, you know I used to have a beautiful chest of drawers in that room and it’s gone,” you have an answer to say, “No it isn’t, it never was there because here’s the video that I took the day after I got the job of being an  executor.” It’s a trick that you can get trapped and you can get caught into and a nice answer to it is if you have the evidence in response to it.

 

Suzana Popovic-Montag: And that’s so much easier than the suggestion to go and make a handwritten list, for instance, and helps with the identification too, so I think that’s a fantastic suggestion.

 

Ian Hull: One of the things that you really struggle with, I think, in the whole management of the real estate is when they’re in a commercial or semi-commercial, and I call that semi-commercial as a residential landlord situation. Or commercial landlord situation. What early action steps need to be taken?

 

Suzana Popovic-Montag: Well, in those situations, Ian, I think it’s always recommendable to look for the lease, to review its terms and to see about contacting the tenants so that in terms of going forward and collecting rent and making any re-direction of payments that are necessary, that you can do that by having this documentation firstly in hand and secondly understand what it provides for.

 

Ian Hull: And as with any piece of real estate, you want to know what encumbrances are on the property.  For example, a mortgage, sometimes the mortgage is mortgage insured. But if it’s not mortgage insured, you want to look at the terms because some financial institutions might be prepared to re-negotiate the mortgage because the person’s passed away. You might be able to get more favorable terms and so forth. Now that’s all good news, but it’s also probably expected of you as an executor to look into that level of business expertise.

 

Suzana Popovic-Montag: And when we started this series of podcasts, Ian, we talked about, you know, executors doing their homework.  But this is another illustration of those kinds of things that we’re hoping that people will do during their lifetime in terms of, you know, getting insurance documentation together, getting information about real estate together and here now rental property or leases or mortgages, that kind of stuff. If it’s all together, it certainly will help your executor at the end of the day.

 

Ian Hull: So Suzana, what happens if the deceased was renting a property, say renting a condominium or an apartment building unit?

 

Suzana Popovic-Montag: Well, one of the first things that you’d want to do is to contact the landlord and advise them of the fact that the tenant has now passed away and see how you would go about either cancelling the lease and providing vacant premises or otherwise dealing with the interim period until decisions are made as to how to go on.

 

Ian Hull: And I guess in the right circumstance, you might even want to look at subletting if you can’t get out of the lease arrangements that they were in.

 

Suzana Popovic-Montag: That’s probably a really good suggestion.

 

Ian Hull: Okay. This is a bit of a loaded question and we’ll spend more time in future podcasts on this as well, but what do you do if you have an ongoing business?

 

Suzana Popovic-Montag: Well that really is, as you say, a loaded gun because that’s not something that you can just quickly cancel and put aside and deal with on a rainy day. You actually have to arrange for the continuity and I’d say competent management of the business in the meantime until either you distribute it pursuant to the terms of the Will or you continue to manage it in accordance with the terms of the Will

 

Ian Hull: And without getting into too much detail in this podcast, you’re right, I mean it’s such a loaded question.  But, you know, in the course of the continuity and creating a competent management team, you probably want to meet with them and create some sort of short term plan of action as to how you’re going to operate the business.

 

Suzana Popovic-Montag: That’s for sure. And you may also want to review if there’s any buy/sell agreements that are in place, shareholder’s agreements or those kinds of corporate documentation that may provide for how to deal with the situation in the meantime.

 

Ian Hull: Okay. We are now inching toward that fateful moment of getting probate and we’re not quite there.  But one of the first steps that we want to make sure we’ve got under control is opening an estate bank account. Coincidentally I’m on my way after this podcast to go close a bank account which is full circle on an estate administration. But in this case, we want to be mindful of what’s going to be necessary and:

 

1. Is opening a bank account necessary? and
2. What are some of the steps we’re going to have to take in that regard?

 

Now what I often will do is I will send a letter to the bank just advising them, because I don’t have probate. They’ll want probate before they’ll actually open the bank account typically, but I don’t have probate in hand.  But I’ll write them and say, “Look, I’m the executor, here’s a notarial copy of the Will. I look forward to seeing you, my face is now on this file, not the deceased’s.” And it softens the bank up and it gets it ready to sort of deal with an account that is not normal anymore. or is not being dealt with by someone who’s alive. And I send that same to the financial institutions as well, sort of priming everybody to know that I’m coming down the pipe. I don’t have probate.  I’m applying for probate, or if I’m not, in the right circumstances. But typically you’re going to be applying for probate if you’re going to need to get money out of financial institutions. So I’ll just make it clear that I’m applying for probate and you can expect to hear from me shortly. This letter actually does take the account out of the mainstream of the bank operations and flags it in some meaningful way so that they’re going to be ready for you when you get your probate application. It doesn’t take much time and it’s a helpful step

 

Suzana Popovic-Montag: I think it also helps, Ian, in the event that the account is somehow held jointly with another to put the bank on notice of the fact that one of the joint account owners is no longer alive and there may be consequences that arise from that, if it’s not clearly a, you know, right of survivorship kind of situation.

 

Ian Hull: Okay. So finally, just because again I’m coincidentally on my way to go do this as well, is the locating and cleaning out the safety deposit box. An important step and again one that you want to document very carefully. I will often just take notes of what I have taken out of the box or make an inventory as soon as I’ve emptied the box, back at the office, of everything that I’ve taken out. Sometimes I’ll even video that moment in time.  That’s not always the case. But you want to make sure that you keep the custody of the documents and whatever is in the safety deposit box under tight reign and control.

 

Suzana Popovic-Montag: Well I think that brings us to the end of this week’s discussion. Thanks very much to all of our listeners for joining us and thank you for joining me today, Ian.

 

Ian Hull: Thanks very much Suzana. And again, don’t forget to come to our webpage at hullandhull.com and you can link into our daily blog.

 

Suzana Popovic-Montag: And we hope to have a little bit of interaction with the comments from the people who are listening and any comments, questions they might have we’d look forward to receiving them.

 

Ian Hull: So for that number again 206-457-1985. Thanks so much.

 

Suzana Popovic-Montag: Thank you.

 

You’ve been listening to Hull on Estate and Succession Planning with Ian Hull and Suzana Popovic-Montag.  The podcast you have been listening to has been provided as an information service.  It is a summary of current legal issues in estates and estate planning.  It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.

 

To listen to other Hull On podcasts, or to leave a question or comment, please visit our website at www.hullestatemediation.com.

 

Our theme music is UpTempo14 by Gary and is courtesy of the Podsafe Music Network.

 

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Listen to "Arranging an Agreement on Cottage Property"
Read  the transcribed version of "Arranging an Agreement on Cottage Property"

This week on Hull on Estate and Succession Planning, Ian and Suzana continue talking about cottage and recreational properties.

Click "Continue Reading" for the transcribed version of the podcast.
Transcription

Arranging an Agreement on Cottage Property - Hull on Estate and Succession Planning Podcast #77

Posted on September 11^th, 2007 by Hull & Hull LLP

Suzana Popovic-Montag: Hi, and welcome to Hull on Estate and Succession Planning. You are listening to Episode #77 of our podcast on Tuesday, September 11^th, 2007.

Welcome to Hull on Estate and Succession Planning, a series of podcasts hosted by

Ian Hull and Suzana Popovic-Montag, that will provide information and insights into estate planning in Canada, from the offices of Hull Estate Mediation in Toronto, Ontario, Canada. Here are Ian and Suzana.

Ian Hull: Hello Suzana.

Suzana Popovic-Montag: Hi there Ian.

Ian Hull: Boy, it’s hot in the city these days. Very weird. We’ve just come out of the summer thinking it was going to go into the fall and a little cooler. And we had some weird weather last week but no complaints.

Suzana Popovic-Montag: And kids are all back to school, so it’s a great time of the year.

Ian Hull: That’s right, it couldn’t be busier. So it’s nice to sit back and take a deep breath, talk a little bit about some estate stuff, get recorded doing it. And on today’s podcast, I thought what we might do is just continue through our working theme of cottage property, recreational properties. I know on the last podcast we were focusing on at the end the fund for maintenance and repairs and improvements: (a) the importance of it and; (b) just some of the mechanics behind it. So, why don’t we just take that point and develop it a little further. Because this all ties into the agreement that works for everyone, and how you create the agreement that works for everyone. So what about the funds for maintenance and repairs and improvements?

Suzana Popovic-Montag: Well, Ian, just like any agreement or contract or arrangement, you want to make sure that the terms would set out how this fund is actually to be used, what for and maybe even consider listing specifically the certain types of maintenance and repairs that would be done out of the funds that are in this arrangement.

Ian Hull: That’s so important because you can sometimes get into a debate as to whether or not, say some part of the family comes up and they use the boats and kayaks and canoes and the other part of the family use it, the cottage, but they never touch the waterfront because they like playing baseball in the backyard or something. And then there’s a dispute as to, well who has to fix the boathouse when it starts to fall apart? So identifying that can be a really helpful tool.

Suzana Popovic-Montag: And you could also set out, I think in these kinds of arrangements, how different co-owners or the people that you have made or named beneficiaries of the cottage, could vote or agree or consent to certain major repairs or improvements being made.

Ian Hull: That’s a good idea because even if you try to document and list as best as you can, you’re going to miss something. You’re either going to miss a category or an event. And so then what you’re saying is you just throw in a mechanism that allows the group to decide beyond that.

Suzana Popovic-Montag: The terms, I think, would also have to address the fact that, you know, the reality that perhaps the fund that’s set up or the agreement that’s made, may not last forever. It may not be sufficient. And, you know, in those circumstances, you might want to consider what happens then.

Ian Hull: Absolutely, because then really what you have to do is set in a mechanism to start taxing the group of owners, in a sense, to keep the fund going. These maintenance funds for property are hard enough to set up, but it’s also hard enough to find the money at the front end to do it, especially when you don’t even know what to predict. If it’s going to be worth $2,000 a year in repairs, or is it going to be $20,000?

Suzana Popovic-Montag: That’s right.

Ian Hull: So one of the things that, you know, we have seen our clients do is literally create a formula that develops over the lifetime of the agreement, knowing that expenses will go up and knowing that they often, at the outset, the initial expenses can be heavy because maybe once you take the cottage over, or you buy the cottage from your parents, or whatever, you have to do the kitchen because the parents have not done anything with it for 30 years or something. So there may be some up front expenses that you can agree on. And then you’d want to just create this funding mechanism by saying every year, x% is going to come in from the fund from your own sourcing.

Suzana Popovic-Montag: And I think as a concept, that makes a lot of sense, and that’s why, you know, we can all agree up front that these kinds of things are necessary, we should be anticipating them. But unless you’ve actually, you know, put it pen to paper and somehow encapsulated that agreement, it just will open up the possibility for disagreements at the end of the day, I think.

Ian Hull: So, speaking of disagreements, how do we…we’ve said we’ve got the thing identified, we’ve got hopefully the categories. And if we’ve missed a category, we’ve got a mechanism to revisit the expense and how it’s going to be paid. What about the decision-making process though? Like, what sort of tricks and tips can we add to the agreement to help with that?

Suzana Popovic-Montag: Well I think, Ian, the terms should specifically set out how it is that these decisions are going to be made for the property. And if you’ve got a trust arrangement, for instance, it might be the trustees who are making all of the decisions. And if you’ve got more than one trustee, you have to decide if they can act either unanimously or just by majority. Those kinds of mechanisms where people can suddenly have a definitive answer being made by an identified group of people.

Ian Hull: And, you know, we can sometimes work outside the box a little bit and think about how you want to create this decision-making chain or process. And the terms of the trust can also provide that for certain matters, the consent of certain groups of beneficiaries, for example, possibly adult beneficiaries with a direct interest in the property, would have to be required. And so you have to…you’re forced to go to those who are directly going to benefit or it’s directly going to cost them, to get their consent before you can go put a new second floor on the cottage or something.

Suzana Popovic-Montag: And if you’re in a situation where you’ve got maybe a co-ownership agreement, then maybe that agreement itself can say that, you know, perhaps a majority of the owners are the ones that make the decisions.

Ian Hull: And that co-ownership agreement is, I think, one of the most important…it’s like the shareholders’ agreement in a good corporate situation. They are just such vital documents and if they’re done right, they are so effective.

Suzana Popovic-Montag: And I think in those cases, you know, you want to make sure that major decisions and things like, for instance, ultimately deciding to sell the property or an interest in the property, in that kind of situation you may want more than just a majority or you might want actually unanimous approval by all the owners, because it is such an important decision.

Ian Hull: And there’s also this twist that with these co-ownership agreements, and sometimes this idea is missed, is that you want to set out who will specifically act on behalf of minors who have an interest in the property. You’re almost what we call appointing a litigation guardian, so to speak. But you’re trying to anticipate that everyone who has a financial interest in the process is at least at the table and who are the representatives at the table. There’s some legal consequences of just randomly picking someone, putting it in an agreement. So we don’t want to worry about getting into the mechanics of that too much, but I just think that they have to dovetail that out too, and think about the minor children’s interests and how you’re going to deal with it on this. And again, we’re talking about major moves, like the sale of the property and the like.

Suzana Popovic-Montag: I think the agreement as well should speak, at least to some extent, about the assignment of responsibilities.

Ian Hull: That’s a great idea because the terms of the trust or the co-ownership agreement, if they set out who is responsible for dealing with the routine matters such as paying the bills and that, it can actually bring a lot of peace, because we all know in our own lives that, you know, typically in a situation where there’s a busy family, someone has to pick up the bills and someone has to deal with that issue. And if you don’t identify who’s got the sort of core things, if the pump breaks, who’s going to be looking after it, who’s going to take over, who’s got the connection to the handyman or however. And you might want to set those responsibilities right out in the agreement.

Suzana Popovic-Montag: And if you’ve got a trust, then usually it would be the trustees I think who would be the ones who are, you know, given the responsibility to do these things. And in perhaps a co-ownership agreement, it might be a particular owner who’s going to be given the responsibility for, as you say, paying bills or doing whatever is necessary to maintain that property.

Ian Hull: And when you’ve got a co-ownership agreement, as opposed to a trust, you can even, you know, take the load off the shoulders of the one family every year and, for example, set up rotating responsibilities for one of the co-owners from one year to the next, or maybe for a five year period. It is difficult, because sometimes you have to develop personal relationships with the people that are going to help fix the place or deal with you or your neighbours and so on. But sometimes people get angry about the fact that they’re doing all the work and so what you do is you agree to rotate the job.

Suzana Popovic-Montag: And I think specifically, you know, given that this is usually a recreational property, the fact that, you know, somebody is viewing themselves as having to do more than others to enjoy the property, could lead to that tension. So actually building in some kind of mechanism, or at least turning your mind to the possibility, is a great idea.

Ian Hull: Okay, well I think there’s some more ideas that we have on the whole, well the terms of the trust or the terms of the co-ownership agreement, we can talk maybe about in our next podcast, about scheduling the use of the property, talk about the consequences of defaults should they occur, and some of the other ramifications that you may want to consider in the context of a co-ownership agreement. So why don’t we save that for our next podcast and thanks very much, Suzana.

Suzana Popovic-Montag: Thanks to you, Ian.

You’ve been listening to Hull on Estate and Succession Planning with Ian Hull and Suzana Popovic-Montag. The podcast you have been listening to has been provided as an information service. It is a summary of current legal issues in estates and estate planning. It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.

To listen to other Hull On podcasts, or to leave a question or comment, please visit our website at www.hullestatemediation.com.

Our theme music is UpTempo14 by Gary and is courtesy of the Podsafe Music Network.

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Listen to "Securing Interest in Land in Litigation"
Read the transcribed version of "Securing Interest in Land in Litigation"

In this week's episode of Hull on Estates, Sean Graham and Natalia Angelini discuss securing interest in land in litigation.

Click "Continue Reading" to read the transcribed version of this podcast.

Securing Interest in Land in Litigation - Hull on Estates Podcast #75

Posted on September 4^th, 2007 by Hull & Hull LLP

Sean Graham: Hi, you’re listening to Hull on Estates, podcast #75, on Tuesday, September 4^th, 2007.

Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada.  Hosted by the lawyers of Hull & Hull, the podcast will touch on some key considerations when planning estates and Wills. Now, here are today’s hosts.

Natalia Angelini: Hi Sean, how are you today?

Sean Graham: Oh, pretty good. How are you Natalia?

Natalia Angelini: Very well.

Sean Graham: We thought we’d talk about ways of securing interests in land in litigation. And Natalia, you’ve done a lot of this so maybe you can set the table a little bit for how you might go about doing that.

Natalia Angelini: Sure. Often times in litigation, there’s an interest in land that’s in question that either beneficiaries are disputing over or the ownership is uncertain. And in those kinds of situations, in order to protect your client, and secure the property, one of the things that you can do is get a Certificate of Pending Litigation registered on title to the property.

Sean Graham: And when does this generally come up in your experience? Does it come up at the start of the litigation, or, you know, as an interim step partway through? What’s your experience?

Natalia Angelini: In my experience, it comes up most often at the very beginning of litigation, which is usually better because you can deal with it immediately and secure the property immediately and reduce the risk that it can be transferred or encumbered during the litigation.

Sean Graham: Now would you say that this is one of those sort of drop dead issues where the client comes in to a meeting and there are certain issues that sort of raise our red flags at the outset. Is this one of those?

Natalia Angelini: I think it can be. I think, in my experience, that’s how it’s come about.

Sean Graham: Yeah, I also would say that in those initial meetings, it’s very often the case that the clients are, they have been waiting to see you, they’re pretty ready to go, they want to take steps right away. And the Certificate of Pending Litigation is generally one of those where there’s land involved ‘cause you do not want the clients to leave and let it sit for 3 or 4 weeks and then before you know it, someone’s sold the property and the client is left holding the bag.

Natalia Angelini: Right and it’s something that once clients discuss the issue with us, and raise the issue of land, its certainly, a red flag certainly goes off in my mind and I immediately consider the steps that we could take to deal with that.

Sean Graham: Now…I’m sorry…now in terms of process, how would you get that issue off the ground?

Natalia Angelini: Well when you want to get a Certificate of Pending Litigation, firstly it has to be in your originating application. So you seek that relief in your application together with the other relief that your clients are seeking. And then you bring a separate motion. Typically I bring that separate motion almost immediately because I want to get the CPL issue nailed down and deal only with the CPL in that motion most often. And that motion is brought pursuant to Rule 42 of the Rules of Civil Procedure and Section 103 of the Courts of Justice Act. So those…that statute and that Rule provide part of the grounds for that motion or form them.

Sean Graham: Now I think it’s worth mentioning. You don’t actually need to claim ownership of the land in order to get a Certificate of Pending Litigation. It’s enough to claim an interest in the lands. So you don’t have to say you are the complete owner of that land. And in the estate context, one area that might come up is by saying “I am a beneficiary of this estate, this estate owns or ought to own or has some interest in the land, ergo as a residuary beneficiary, I do as well”. And so, in many cases, there’s more than one beneficiary and so you can’t really claim to be the complete beneficial owner of the piece of land which is going to fall into residue and then be divided. But it is enough to have an interest. And I think that’s a point worth considering.

Natalia Angelini: Right.

Sean Graham: Now, in terms of the Order itself, how long does the Certificate of Pending Litigation last?

Natalia Angelini: A Certificate of Pending Litigation lasts until the Order granting it is set aside, or varied.

Sean Graham: And so, I take it, no one is gonna buy a piece of land where the ownership is in issue by a Certificate of Pending Litigation. So in effect what you do is you freeze title to the land, potentially for years.

Natalia Angelini: Absolutely. Its, depending on the circumstances, it can be quite a draconian measure.

Sean Graham: And that brings me to the sort of downside. Because for every strong measure like this, there’s generally some risk to the client who wants it imposed. And maybe we could touch on that for a minute.

Natalia Angelini: The downside, the potential downside, Sean, is that your client can be liable for damages that may result from the CPL being registered. For instance, where the property is restricted from being sold when there is, you know, a buyer available and an offer made and ultimately at the end of the litigation, it turns out that there’s a finding that the CPL should never have been registered. So even though, in this case, clients don’t have to give undertakings as to damages, like they do in injunction cases, that risk is still there. And, you know, you’ve got to advise your client and your client should be aware of that risk and I think you’ve got to assess, you know, the strength of their case and the extent of their interest in the property.

Sean Graham: So you have to be pretty sure, it seems to me.  With the fact that there’s no explicit undertaking, I gather would probably not carry too much weight with the Court if a $2,000,000 deal was lost and the value of the land plummeted and then it was found out that the beneficiary ought not to have meddled in the title. All of a sudden you’re on the hook for the difference, plus the costs of the other side, plus your own costs. That could be quite a devastating result, so…

Natalia Angelini: Right…

Sean Graham: …not surprising, I guess, that with the heavy hammer comes a pretty significant risk as well. So, given those risks, I think that it’s worth mentioning that a Certificate of Pending Litigation is kind of at one end of the spectrum. It gives you a great deal of protection but there’s corresponding risk. And maybe there’s other, maybe not so strong remedies, but other remedies that you can come up with in dealing with land and could you mention some of those?

Natalia Angelini: Sure. There certainly are. And that can range from obtaining a Court Order. I think this would happen later on in the litigation, where you’ve presented your full case to the Court and you get an Order from the judge saying, or essentially disallowing the opposing side to sell the property, rather restricting them from doing that. Something that is commonly done is placing a Caution on the property. And it’s not too difficult to get a Caution registered. Your interest does have to be set out on the Caution. I know that in several cases, people try to slap Cautions on without a real legitimate claim to the land. And, you know, the Registrar will ultimately remove the Caution. But if you do have a legitimate interest and the Registrar is satisfied, that Caution will stay on and it has a lifespan of 60 days. However, in practice, what I understand is that unless someone attempts to do something with the land, that Caution can still stay on after those 60 days. It’s not automatically removed.

Sean Graham: Now I take it that the risk with the CPL, the Certificate of Pending Litigation, is that what you do to the land or what you ask the Court to do to the land could reduce the value or the value decreases over time and an opportunity to sell is lost. You would think that maybe the same things may happen with an Order and a Caution. So I just want to be clear, I don’t think we’re completely off the hook on this by getting an Order or a Caution as opposed to a Certificate of Pending Litigation.

Natalia Angelini: We’re not, but at least in respect of the Caution, I mean, it really is a much more temporary measure. And I think it can provide your client with interim security since the property cannot be sold without the consent of the Cautioner. So it can give you that interim security but it isn’t so definite that it can really sort of hinder or scuttle a sale. There is one more way to address this scenario and it’s certainly risk-free for your client and it is getting the other side to agree to sign an undertaking not to sell or encumber or in any way deal with the property. And I’ve done that before but I think it’s restricted to the scenario where you’ve got an opposing side that’s trustworthy and, you know, whose undertaking would satisfy your client.

Sean Graham: Yeah, and I find a lot of times that comes down to sometimes even the lawyer on the other side, but certainly the client. If you have a trust company, you’re pretty safe with that undertaking. Or if you have sort of a client on the other side that you know has substantial assets, those types of considerations certainly come into it. And then you can get pretty much the full benefit of a Certificate of Pending Litigation, at least from a practical point of view, without some of the downside risks. Because if the other side either undertakes or consents to an Order not to sell the land, I do think it’s much less likely, although not impossible, it’s much less likely that the Court is going to impose a costs Order on you at the end of the day.

Natalia Angelini: Right, and in going the consent Order route, sorry, or the undertaking route, it’s a lot less costly.

Sean Graham: For sure, and you don’t have to dispute it. I mean, I’ve had certainly injunction motions where the litigation fees quickly get into the tens of thousands of dollars and it’s not a guaranteed remedy. It’s quite a risky step and very often clients who are gangbusters to get going, when they hear about it, you know, may back off and they may have some sober second thoughts when they find out what some of the consequences of bringing that remedy and losing, or even the cost consequences, the expenses of bringing the remedy and winning. So often after you have that chat, some of the alternatives we talked about look better and better.

Natalia Angelini: Umm, I agree Sean, good point.

Sean Graham: Well, I think we’ve covered the very basics of this at least. And hopefully that’s helpful to people. Thanks very much, Natalia.

Natalia Angelini: Thank you.

This has been Hull on Estates with the lawyers of Hull & Hull. The podcast you have been listening to has been provided as an information service. It is a summary of current legal issues in estates and estate planning. It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.

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