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Lawrence v. Maple Trust [2007] decided by the Court of Appeal, corrected the Liu decision, below. The Common Law has the general view that a person cannot transfer better title than he's got. It's a simple rule which means that if a thief steals my TV and sells it to some fellow who doesn't know it's stolen, I am still the real owner, and the fellow that bought it from the thief is out of luck, not me- I get my TV back. However, this rule does not exactly work under the Land Titles Act, which is designed to guarantee land ownership based on what the register indicates is the case. So, using the TV example, what the Act says is that though the fellow that bought the stolen TV is out of luck, if he in turn sold it to a second fellow (before I get it back), that next person in line does acquire good title, and I lose my TV to him! A thief can't convey good title, but the customer of a thief can. To put it another way, the person who deals with the thief is the one who had a chance to stop the problem, and should therefore take the fall; thus Liu was wrong, as the bank dealt with the crook, and should not have won.

Household Realty v. Liu, [2005], was a very startling decision by the Court of Appeal. In this case, a wife fraudulently forged her husband's signature to a Power of Attorney, and then used that Power of Attorney to obtain a bank mortgage on their family home (steps taken to finance a gambling binge). The bank was not aware of the forgery/fraud, and there was no dispute that the husband was completely in the dark about what had happened. The mortgage didn't get paid, and the bank sought to recover its money, at which point of course the husband came up to speed, and the fraud unravelled. Who suffers the loss for the wife's fraud? The husband. Historically, it would have been the bank, but the Court interpreted the Land Titles Act to say that, though a crook could not enforce a fraudulent transfer of ownership to him or herself, a crook could register a mortgage, which a bank could enforce.

What does all this mean to you? First, courts change their minds; the law is not carved in stone, and judges can be wrong in hindsight; for all we know, Lawrence may also be overruled some day. Second, if you are buying property, you want to be sure you are not dealing with a fraud artist, or you are wasting your money; lawyers help with this. Third, if you own real estate, selling or not, you may want to purchase title insurance, to give you some assistance in fighting title fraud, because if a crook sells your home to a stranger (which you wouldn't know about), if that stranger sells it on, you lose your home! The "good" news is that the Land Registry system will compensate you for the loss of your home (ie, with a cheque) but only after you have proven that you have taken all steps to catch the thief and sued him for payment (yeah, ok).

"YOU MUST HAVE AN AGREEMENT OF PURCHASE AND SALE IN WRITING FOR THE DEAL TO BE LEGALLY BINDING. If real estate agents are involved, they will prepare a written Agreement, but sometimes real estate agents are not involved. I can prepare an Agreement of Purchase and Sale, or if you prefer, YOU CAN PREPARE YOUR OWN. Here is a link to one such service. PLEASE NOTE: I HAVE NO INVOLVEMENT WITH THE CREATION OF YOUR AGREEMENT USING THIS METHOD, AND CANNOT BE HELD RESPONSIBLE FOR THE SECURITY OF THE PROCESS OR THE END PRODUCT. However, I offer this economical choice because there must be a written Agreement."

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