What if there is an unresolved lien on the title on closing day?

A lien that is still on the register on closing day is a registered claim against the asset, and Ontario’s guidance warns that a used car a lender has rights in could later be seized if the borrower fails to repay. A lien can sit on land title or in the personal property registry, and the questions are the same in both: who pays it out, and what proves that it has gone?

What an entry does and does not tell you

A British Columbia land title lists the charges, liens and interests registered against it, and a title search reflects the register at one moment. British Columbia’s Personal Property Registry records security interests and liens against personal property belonging to businesses and individuals, though the province notes some liens are filed with other government agencies. An entry shows that a claim was registered, not that the debt is still owing. Ontario’s guidance says that if no discharge is registered, the registration stays in its system until the end of the registration period.

Your options at the table

Ontario’s guidance for buyers of used goods is a useful model. If the loan has been repaid, the buyer should insist that the seller require the lender to register a discharge promptly, before the sale is completed. If the loan is outstanding, the buyer may decide against completing the sale or require the seller to arrange payment of the loan and registration of a discharge. That guidance is written for consumers, so for a business purchase your agreement and closing instructions decide how the payout is made and proved.

Liens that arise by statute

Some liens are not loans. WorkSafeBC says unpaid premiums can put the firm’s assets under a lien in its favour, and a clearance letter protects a buyer against it. Alberta’s Workers’ Compensation Board says that where an employer has defaulted on premiums, it has priority on the property or the proceeds of property used in the business. Get these clearances before closing day, not on it.

If the holder cannot confirm in time

Whether closing can be postponed, or a buyer may decline to complete, is set by the agreement’s own terms, so read the closing conditions and any extension clause. Your lawyer may also repeat the search shortly before funding, and why lawyers search again on closing morning explains why.