Zombie Deed Sparks Reoccurring Legal Debate

Absent a sequel by way of appeal, the Ontario Superior Court of Justice may have struck the final blow to the head of “zombie deeds”. A “zombie deed” generally refers to a transfer of an interest in land registered after the death of the transferor as if they were still alive. In some cases, the documents effecting the transfer were signed but left unregistered due to inadvertence; in other cases, there may have been an intentional decision to leave the transfer unregistered until after death to avoid probate and/or disclosure of the transfer to another party (typically a spouse).

This practice seemed to have received tacit judicial approval in a 2015 decision by the Honourable Justice Patillo which upheld the validity of an unregistered transfer: Winarski v. Sproul, 2015 ONSC 812. However, Justice Patillo's decision did not address the potential consequences of unregistered deeds on the Land Titles Act registry system which is based on the principle that what is shown in the registry reflects the true state of title. The Director of Titles in Ontario has taken the position for some time that transfers effected pursuant to so-called “zombie deeds” are ineffective and, if discovered, will be rejected by the Land Registry Office.

These issues have now been addressed in more fulsome reasons by the Honourable Madam Justice Macleod-Beliveau in Thompson v. Elliott Estate, 2020 ONSC 1004 (CanLII) .

The case involved a “zombie” transfer registered on behalf of the deceased, Ms. Elliott, by her lawyer shortly after the date of her death in respect of the matrimonial home which she had owned in joint tenancy with her husband, Mr. Thompson. The transfer at issue severed the joint tenancy. Mr. Thompson took issue with the transfer and sought a declaration that he held a 100% interest in the property by right of survivorship. By the time the matter was heard in Court the property had been sold to a third party (with the cooperation of the estate and Mr. Thompson) and the dispute concerned whether or not Ms. Elliott's estate was entitled to a 50% interest in the net proceeds of sale as a tenant in common.

Justice MacLeod-Beliveau firstly assessed whether the joint tenancy had been severed. Her Honour noted that the law in Ontario is settled in that it is thedelivery and not the actual registration of a deed/transfer that determines if a joint tenancy has been severed. Evidence ofdelivery is established by words or conduct showing that the transferor's...