Imagine you are selling a house in Brampton. Your buyer has financing, the movers are booked, and three days before closing your real estate lawyer calls: something has appeared on title. It is a certificate of pending litigation, registered on behalf of a relative who says she helped pay for the home years ago. You have not been to court. You may have only just learned the lawsuit exists. Yet your buyer’s lawyer, and the buyer’s lender, may now refuse to proceed.
This is why a certificate of pending litigation, usually called a CPL, is such a powerful step. It does not decide who owns anything. It does not transfer title. What it does is put every future buyer and lender on notice that someone claims an interest in the land, and that any deal is made subject to the outcome of the case. In the real estate market, that notice is often enough to freeze the property.
This article gives general information about how CPLs work in Ontario. It is not legal advice, and a CPL dispute usually moves quickly enough that you should speak to a lawyer about your own facts without delay.
What the Certificate Actually Does
Section 103 of the Courts of Justice Act starts from a simple idea. Merely commencing a lawsuit about land is not notice to anyone who is not a party. A stranger looking to buy the property could not be expected to search the court files. Once a CPL is issued by the court and registered in the land registry office, however, the claim is on title for all to see. Section 103 allows registration whether the land is under the Land Titles Act or the older Registry Act.
Registration does not technically forbid a sale. An owner still holds title, and someone could still choose to buy. The practical effect is the difficulty. A purchaser takes the land with notice of the claim and could lose it if the claimant wins, so few purchasers will accept that risk, and few institutional lenders will advance money against it. For a family that needs to sell to fund a move, or a small developer whose project relies on a construction loan, the pressure can be intense.
You Need an Actual Claim to the Land
A CPL is available only in a proceeding where an interest in land is in question. This is the most important limit, and it is the one most often misunderstood. Being owed money is not an interest in land, however strong the debt and however obvious it is that the land is the debtor’s only real asset.
Consider a few hypothetical disputes:
- Likely to raise an interest in land: a buyer suing to force completion of a signed purchase agreement for a particular property, an adult child claiming a constructive trust in a home because of years of mortgage payments, a person claiming that a transfer of title was obtained by fraud, or a business partner claiming that a building was bought in one name to be held for both.
- Unlikely to qualify: a contractor suing for an unpaid bill with no lien rights left, a lender with an unsecured promissory note, a business partner seeking only a share of past profits, or a buyer whose real complaint is a lost deposit.
Mortgages and construction liens have their own systems. Section 103(3) says the CPL provisions do not apply to foreclosure or sale on a registered mortgage or to enforcing a lien under the Construction Act. A contractor with valid lien rights uses those lien rights, and those run on strict timelines.
Claims involving a fraudulent transfer can be harder. Where someone has moved a property to a relative to avoid a creditor, the creditor may be seeking to undo the transfer rather than asserting ownership. Ontario courts have applied a stricter approach to CPLs in these situations, and simply using the words “fraudulent conveyance” in a pleading does not by itself entitle a claimant to a certificate.
Since a Small Claims Court action cannot decide an interest in land, a CPL is a Superior Court tool. In Peel, that generally means a statement of claim issued at the Superior Court of Justice in Brampton, 7755 Hurontario St., and a motion to a judge.
How One Is Obtained
Rule 42 of the Rules of Civil Procedure sets out the mechanics. Four features are worth knowing.
First, the claim must be pleaded. The party seeking a CPL has to include a claim for it in the document that starts the case, along with a description of the land sufficient for registration.
Second, a court order is required. The registrar may issue the certificate (Form 42A) only under an order of the court. A plaintiff cannot simply file it on request.
Third, the motion may be made without notice to the owner. An owner may therefore first learn of the CPL after it is registered. The rationale is practical: an advance warning could allow the owner to sell or encumber the land first.
Fourth, a moving party who goes without notice must be scrupulously candid. Rule 39.01(6) requires full and fair disclosure of all material facts on a motion without notice, and a failure to do that can in itself be enough to set aside the order. Leaving out the unhelpful letter, or the prior agreement, could undo the whole thing. Rule 42.01(4) also requires that the order be served promptly, along with the motion materials, on the parties against whom an interest is claimed.
The Test Courts Apply
Courts ask whether there is a triable issue that the claimant has a reasonable claim to an interest in the land. That threshold is not a final decision on the merits, so a judge will not usually resolve competing affidavits at this stage. It is still a real check, and the claim must be supported by evidence.
If the threshold is met, the judge goes on to weigh the equities. Ontario decisions look at factors such as these:
- whether the land is unique to the claimant, or whether money would be an adequate remedy
- the nature of the owner and the claimant, for example a home versus a speculative investment
- the balance of harm if the certificate is granted or refused
- the likelihood that the plaintiff will succeed
- any delay in bringing the claim, and whether there is an available alternative, such as a sum paid into court
Uniqueness tends to matter where a buyer wants the property itself. If a buyer’s plan was to resell a townhouse as an investment, a court may be more inclined to see money as a sufficient answer than where a family wants a specific home for reasons that go beyond price. The same reasoning applies to a claimant whose real goal is financial, though there are many fact patterns where a monetary claim and a land claim sit side by side.
Timing matters too. Limitation issues can surface where the claim to land rests on events long past. The Real Property Limitations Act generally gives ten years for an action to recover land, and other claims may be subject to the two-year basic period under the Limitations Act, 2002. Which period applies is a real question in many of these lawsuits, and it can decide the whole case.
The Risk Falls on the Party Who Registers It
A CPL is powerful, and the law recognizes that it can be abused. Section 103(4) says a party who registers a certificate without a reasonable claim to an interest in the land is liable for any damages sustained by any person as a result. Section 103(5) allows those damages to be determined in the same lawsuit or a separate one.
Think of what those damages could involve: a lost sale, a price drop in a falling market, carrying costs during the delay, extra interest on a bridge loan, or a lost financing opportunity. A CPL can leverage a settlement, but courts are alert to its use as a mere negotiating tool, and the party who relies on one in that way may pay for it later. Anyone contemplating a CPL should weigh that exposure against the benefit, and a costs award on top of it, before signing an affidavit. Honest belief in a grievance is not the same thing as a reasonable claim to land.
Getting a CPL Removed
If a CPL lands on your property, move on two fronts: find out what is claimed, and find out what the deadline pressure really is. Then consider a motion to discharge under Rule 42.02 and section 103(6) of the Courts of Justice Act. The court may discharge a certificate where the claimant:
- claims a sum of money in place of or as an alternative to the interest in land
- does not have a reasonable claim to the interest claimed
- does not prosecute the proceeding with reasonable diligence
The court may also discharge it where the claimant’s interests can be adequately protected by another form of security, or on any other ground that is considered just, and it may impose terms such as requiring security. When a certificate is discharged, section 103(7) says anyone may deal with the land as fully as if it had not been registered.
The moving party has to be prepared with evidence. An owner might show that the claim is really about money, that the claimant could be protected by holding the sale proceeds in trust, or that the original motion omitted something material. The court’s approach on discharge generally tracks the original test, with the facts now tested by both sides. On a contested motion, each party typically files a factum, with the moving party’s due at least seven days before the hearing and the responding party’s at least four days before.
Practical Options During a Live Transaction
A CPL arriving just before a closing is one of the more stressful situations in real estate. A few steps can help:
Call your real estate lawyer first, then a litigator. They will need to speak with each other. The purchaser’s lawyer will not be able to close over the certificate without instructions, and you may need a short extension signed by both sides to avoid a default.
Ask about a consent order. It is sometimes possible to agree with the claimant to discharge the CPL in exchange for a security arrangement, such as holding a set amount of net sale proceeds in a lawyer’s trust account or paying it into court until the dispute is decided. That allows the sale to complete while keeping the claim alive. It is often the fastest way out where the real fight is about money.
Look for an urgent motion date. Court time in Peel can be limited, and timing depends on what the court can offer. Your lawyer should tell you early if a hearing before the closing date is realistic.
Preserve what you have. Bank records, emails, mortgage statements, renovation invoices, and any written agreement between the parties all matter. CPL motions are generally decided on affidavits, so the paper record is the battleground.
Family and Business Disputes
Many CPLs in Peel arise between people who once trusted each other. A parent adds a child to title, or a child contributes to a down payment, and everyone assumes the arrangement is understood until a separation, a death, or a falling-out. These disputes often rest on a resulting or constructive trust claim, which requires looking closely at who paid for what and what the parties actually intended. Spousal disputes can overlap too, and they usually belong within the family law process.
In business, the typical pattern involves a property held in the name of one partner or company while another partner says the land was partly theirs. An agreement drawn up at the outset is usually the best answer to this kind of fight. Once the dispute has arisen, the question becomes whether the claim is truly to the land or to its value, because that distinction often decides whether the CPL stays.
If you are dealing with a certificate on your own title, or you are thinking of asking for one, bring the parcel register, the court documents, and any purchase or financing paperwork. Our real estate and mortgage litigation page outlines the wider area, and you can contact the firm if a closing or financing date is approaching.
A CPL is a modest piece of paper with a large practical effect. Used for a genuine interest in land, it protects a claim that might otherwise be lost to a sale. Used to pressure someone over a debt, it can turn into a claim against the person who registered it. Both sides benefit from getting advice before the next deadline on the calendar.