Under the Torrens system, a property developer fraudulently obtains title to land by forging documents and then sells it to three different innocent purchasers in quick succession before the fraud is discovered. How does the system resolve competing claims between the innocent purchasers?
Correct Answer
B) The first purchaser to register their interest obtains title
Under the Torrens system's principle of indefeasibility, the first innocent purchaser for value to register their interest obtains paramount title, even against other innocent purchasers. The registration system operates on a 'first to register' priority basis, and subsequent purchasers would be compensated through the assurance fund.
Why This Is the Correct Answer
Under the Torrens system's indefeasibility principle, the first innocent purchaser for value to register their interest obtains paramount title. Registration, not transaction completion, determines priority. This 'first to register' rule provides certainty and finality to the land registration system. Provincial Land Titles Acts across Canada codify this principle, ensuring that once an innocent purchaser registers, their title cannot be defeated by subsequent claims, even from other innocent parties.
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Previous Question
Under Ontario's Registry Act, an owner sells a lot to Party A, who does not register the deed. Later the owner sells the same lot to Party B, who pays value, has no actual notice of A's deed, and registers first. Who has priority?
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Under the Torrens system of land registration in Canada, what is the primary guarantee provided to registered owners?