“Zombie” transfers can come back to haunt you
The bottom line: A dead person cannot convey an interest in land
A “zombie” deed/transfer refers to a land transfer registered after the death of the transferor as if the transferor is still alive. There has been much debate around the use of “zombie” deeds – a recent case attempts to put the debate to rest.
A recent case
A wife and husband held joint ownership of the matrimonial home. The wife, unknown to her husband, sought to sever the joint tenancy so that her children from an earlier marriage inherited her 50% interest in the matrimonial home. She met privately with her lawyer and signed the Acknowledgment and Direction with clear intentions and instructions to register the severance without delay. However, through inadvertence (the documents were misplaced), the lawyer failed to register the transfer until after her death. The husband sought a declaration that he held 100% of the ownership. By the time this case came before the court, the home had been sold to third parties.
The judge in this case confirmed that it is the “delivery” and not the actual “registration” of the deed/transfer that determines if a joint tenancy has been severed. Evidence of delivery is that the party whose transfer it is, must by words or conduct, expressly or impliedly acknowledge their intention to immediately and unconditionally be bound by the terms set out in the transfer/deed. In this case, the client “fully and unconditionally relinquished control of the documents to sever the joint tenancy and trusted that the lawyer would immediately register the severance documents.”
It was decided that the tenancy was severed and the husband and wife’s estate each were entitled to 50% of the proceeds of sale.
However, the judge stated the “zombie” transfer was problematic as it contained false law statements concerning the transferor’s martial status and age as if she were alive, in order that the transfer be accepted for registration by the Land Registry Office. The date of death was also changed in order to effect the registration. The judge stated that Ontario’s land registration system relies on the expectation of honesty, integrity and accuracy of lawyers’ law statements. Lawyers that are knowingly holding on to “zombie” deeds to register after the transferor’s death will find themselves unable to register those deeds and without recourse to the courts.
Risk management lessons:
- Register deeds/transfers as soon as possible after you receive them, once all requirements are satisfied
- Do not hold on to “zombie” deeds/transfers to register after the transferor’s death – these are not valid for registration in Ontario and will be rejected by the Land Registry Office, or are at risk of deregistration. Simply put, a dead person cannot convey an interest in land
- If you have a “zombie” deed, the proper course of action is to bring an application in the Superior Court of Ontario requesting a certificate of pending litigation and a declaration of an interest in land and for a vesting order under s.100 of the Courts of Justice Act, setting out all the material facts in support of the application
- Do not make inaccurate law statements at the time of registration – this will result in the registration being invalid
- A person can unilaterally sever a joint tenancy upon the execution of a transfer in land; however, it must be done before the person dies and cannot be done in a will or testamentary disposition
- It is improper to use “zombie” deeds to help clients avoid probate taxes and fees
- Finally, the importance of taking contemporaneous notes when meeting clients is highlighted in this case – the judge accepted the lawyer’s notes were necessary and reliable evidence to support his argument
This article is by Mahwash Khan, Communications Counsel in the Claims Prevention & Stakeholder Relations department at LAWPRO.