In a recent decision, 1332404 B.C. Ltd. v. 1266685 B.C. Ltd., 2025 BCCA 46, the BC Court of Appeal has revisited the lesser-known remedy of a purchaser’s lien and discussed how this lien can be enforced against real property.
Background
This dispute involved a failed real estate sale of two development lots in Langley. During the development approval process, the subdivision rendered the lots unusable for the purchaser’s development purposes. By that time, the purchaser paid the deposit under the purchase contract to the vendor.
The purchaser sued and sought rescission (i.e. cancellation) of the purchase contract and the return of the deposit. The purchaser also sought a purchaser’s lien against the property with respect to the deposit paid, and filed a Certificate of Pending Litigation (“CPL”) against title to the property. The vendor applied to cancel the CPL, arguing that the claim for a purchaser’s lien was inconsistent with the claim for cancellation of the contract, and was not a claim for an interest in land.
The BC Supreme Court found that a purchaser’s lien does constitute a claim to an interest in land. However, the Court continued the analysis to find that there was a “clear inconsistency” between the purchaser’s primary claim for cancellation of the contract and an alternative claim for a purchaser’s lien. Based on this reasoning, the Court concluded that the plaintiff’s claim had “nothing to do with asserting an interest in land”, and cancelled the CPL.
BC Court of Appeal Decision
The BC Court of Appeal disagreed, affirming that the CPL had been properly filed irrespective of the purchaser’s primary claim for cancellation of the contract. The Court confirmed the following principles relating to purchaser’s liens:
- A purchaser’s lien arises the moment a deposit is advanced by the purchaser to the vendor and gives rise to an equitable interest in land. This lien against the land continues even if the contract is thereafter lawfully cancelled by the purchaser.
- A purchaser’s lien has the same effect as if the vendor executed a mortgage in favour of the purchaser – the lien is a security interest in the land and effectively makes the purchaser a secured creditor for the amount of their deposit.
- A purchaser’s lien will only arise when a deposit is paid directly to the vendor (i.e. no lien arises when a deposit is paid to the vendor’s realtor). As the standard practice in BC is to pay deposits to a realtor pending completion of transaction, purchaser’s liens arise rarely.
- A purchaser’s lien and corresponding interest in land continue even when specific performance (i.e. enforcement) of a contract is not possible or when the contract is lawfully cancelled by the purchaser. However, a purchaser’s lien is lost when the contract is terminated as a result of the purchaser’s default.
In this case, the deal collapsed through no fault of the purchaser, and the purchaser properly sought a lien based on payment of its deposit. The fact that the purchaser also sought an alternative remedy of cancellation of a contract and return of the deposit did not defeat the lien claim that justified registration of a CPL.
Takeaways
The above decision confirms that the purchaser’s lien, although an uncommon remedy, remains a powerful tool for intended purchasers in securing a claim to the property they wish to purchase. If you or your client contracted to purchase a property and the transaction did not complete, you may be entitled to a purchaser’s lien and can register a CPL that would prevent the vendor from further dealing with the property.
If you have any questions about registration of certificates of pending litigation or real estate claims generally, please contact Anna Sekunova or a member of our Business Litigation group.
