If a vendor under a purchase contract breaches that contract, the purchaser may rescind and also register a lien on title to the vendor's land to secure repayment of its deposit. The British Columbia Court of Appeal recently confirmed this in 1332404 B.C. Ltd. v. 1266685 B.C. Ltd., 2025 BCCA 46 ("126"), where it overturned a decision cancelling a certificate of pending litigation (a "CPL") registered at the land title office that was based on a "purchaser's lien". A purchaser who has paid any portion of the purchase price is entitled to such a lien if the transaction collapses for a reason other than the purchaser's fault. 126 confirms that such a lien is an interest in land that permits a CPL filing at the land title office and does not preclude the purchaser from pursuing alterative remedies, including rescission and the recovery of the deposit.
Background
1332404 B.C. Ltd. (the "Purchaser") agreed to purchase property in the Township of Langley from 1317903 B.C. Ltd. (the "Vendor"). The Purchaser intended to subdivide the property and sell the newly subdivided lots. The purchase contract required the Purchaser to pay four deposits directly to the Vendor, of which the Purchaser paid the first three. As a result of Langley's development approval process, the property was to be subdivided into more, but smaller, lots than anticipated. Asserting that the Vendor had breached the Real Estate Development Marketing Act (BC) by failing to obtain the Purchaser's approval of any material changes to the layout of individual lots, the Purchaser sought a purchaser's lien, to rescind the purchase contract and finally to recover its deposits. The Purchaser also filed a CPL to secure repayment of the deposits.
Relying on section 215 of the Land Title Act(the "LTA"), the chambers judge cancelled the CPL on the ground that the remedies sought (rescission and return of deposits) were inconsistent with claiming an interest in land (the purchaser's lien). The Purchaser appealed. The Court of Appeal allowed the appeal.
The Appeal Decision
The Court of Appeal clarified that seeking alternative remedies does not preclude a valid purchaser's lien claim, which arises where monies, such as deposits, are paid directly to a seller without a neutral intermediary. Because real estate transactions typically involve a brokerage to hold deposits in trust, purchaser's liens are rare. Where applicable, the lien is a security interest that persists even where (i) damages would be adequate; (ii) specific performance is unavailable; or (iii) the purchaser lawfully rescinds the purchase contract. Only the purchaser's own fault in the collapse of the purchase contract bars its lien claim.
In126, the court held the Purchaser had a valid purchaser's lien that arose when it paid the Vendor directly under a valid purchase contract, which subsequently fell apart through no fault of the Purchaser.
The court also reviewed the authority to cancel a CPL under section 215 of the LTA. Although a court may cancel a CPL where no valid interest in land is claimed, in doing this the court may not (i) assess the merits of a claim; (ii) determine whether there is a triable issue; or (iii) conclude that pleadings asserting a claim to an interest in land are not its "true" nature.
In 126, the chambers judge erred in finding the Purchaser's pleading of rescission barred it from asserting an interest in land. The only material consideration was whether the purchaser's lien was a valid interest in land. The court found it was: the purchase contract was valid; deposits were paid; and the collapse of the purchase contract was not the Purchaser's fault.
Key Takeaways
A party pursuing a purchaser's lien is not precluded from pursuing alternate remedies concurrently. The court cannot cancel a CPL under section 215 of the LTA if the pleadings claim a valid purchaser's lien.
We Can Help
McCarthy Tétrault's BC Real Estate Litigation Group comprises a team of industry-leading BC lawyers with deep experience navigating complex BC real estate disputes. Our lawyers provide a full suite of litigation services across a broad range of disputes, including construction, development, environmental, purchase and sale, tenancy and leasing, land use and bylaw, bankruptcy and insolvency, tax and assessment, and other disputes. Whether you're a developer, an investor, or a real estate professional, trust McCarthy Tétrault to protect your interests and help you achieve your objectives in the BC real estate market.
If you have any questions about real estate disputes, including about CPLs, purchaser's liens or collapsed deals, please contact the authors or the other lawyers in our litigation group.
Case Information
1332404 B.C. Ltd. v. 1266685 B.C. Ltd., 2025 BCCA 46
Docket: CA49768
Date of Decision: February 11, 2025
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