Under Ontario's Land Titles Act, what happens when someone purchases property in good faith from a registered owner who obtained title through fraud?
Correct Answer
D) The buyer gets clear title; the assurance fund compensates the original owner
The Land Titles Act protects bona fide purchasers for value who rely on the register. Even if the seller obtained title fraudulently, a good faith buyer receives clear title, and the defrauded original owner is compensated through the government's assurance fund rather than losing their investment.
Why This Is the Correct Answer
Option D correctly reflects the indefeasibility principle under Ontario's Land Titles Act. When a bona fide purchaser for value buys property from a registered owner, they receive clear and unassailable title, even if the seller obtained title fraudulently. The Act protects innocent purchasers who rely on the register in good faith. The original owner who was defrauded doesn't lose their investment because they're compensated from the government's assurance fund, which exists specifically to cover losses from registration system errors or fraud while maintaining the integrity of the title system.
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Under Ontario's Land Titles Act, what happens when an innocent purchaser for value acquires property from someone who fraudulently obtained title?
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