Certificate Of Pending Litigation In Ontario

A Certificate of Pending Litigation (CPL) is a legal notice registered on a property’s title warning others that there’s an ongoing lawsuit affecting an interest in that property. 

Once registered, a CPL effectively prevents the owner from selling, mortgaging, or transferring the property without addressing the lawsuit first.

CPLs are used when someone is suing over a claim that directly involves real estate. Common situations include:

Real estate disputes:

• Breach of purchase and sale agreements;
• Disputes over property ownership or boundaries;
• Claims that someone fraudulently transferred property.

Estate disputes:

• Fighting over inherited property;
• Claims that property should be part of an estate.

Partnership and business disputes:

• Partners fighting over jointly owned commercial property;
• Shareholder disputes involving real property.

The key requirement is that your lawsuit must claim an actual interest in the specific property — not just monetary damages. You can’t register a CPL simply because someone owes you money.

When a CPL is registered on title, it creates a “cloud” on the property. Anyone searching the title sees the CPL and knows there’s a legal dispute. 

This makes the property likely unsellable because most buyers won’t purchase property with active litigation attached and most lenders will not finance it.

The CPL stays on title until the lawsuit ends or the court orders it removed.

A recent Ontario Superior Court decision, Binio v. Kotarak, provides a helpful illustration of how courts analyze CPL motions in constructive trust and common-law property disputes.

The dispute arose following the breakdown of an alleged common-law relationship.

The Plaintiff claimed that during the relationship, the parties acquired and later sold a property in Erin, Ontario for approximately $1.7 million. 

According to the Plaintiff, he contributed personal funds toward the purchase of the property and also performed substantial renovations and improvements.

The Plaintiff alleged that proceeds from the sale of the Erin property were subsequently used to purchase a second property in Renfrew, Ontario, which was registered solely in the Defendant’s name. 

He asserted resulting trust and constructive trust claims and sought tracing remedies over the Renfrew property.

The Defendant strongly disputed the allegations. She maintained that she alone funded the purchase of the properties, denied that the Plaintiff made meaningful contributions, and argued that his involvement was limited to occasional maintenance work around the home.

The Defendant also argued that a CPL would cause significant prejudice because the property’s mortgage was approaching renewal and refinancing or sale would likely become difficult if title was encumbered.

The Court reviewed the well-established legal principles governing CPL motions under section 103 of the Courts of Justice Act.

Importantly, the Court confirmed that the threshold for obtaining a CPL is whether there is a “triable issue” regarding a claimed interest in land. 

A Plaintiff does not need to prove that they are likely to succeed at trial.

The Court also reiterated that CPL motions are discretionary and highly fact-specific. Relevant considerations include:

• whether damages are an adequate remedy;
• whether the property is unique;
• the strength of the Plaintiff’s claim;
• the balance of convenience;
• prejudice to the parties; and
• whether the CPL is necessary to protect a genuine interest in land.

One of the most important aspects of the decision is that the Court accepted that the Plaintiff had raised a triable issue.

Justice Kaufman held that the Plaintiff’s sworn allegations regarding financial contributions and tracing were sufficient to meet the initial threshold requirement. The Court emphasized that motions for CPLs are not mini-trials and that credibility findings are generally inappropriate at this stage.

However, satisfying the threshold test did not end the analysis. After considering the equities, the Court ultimately refused to grant the CPL. Several factors influenced the Court’s decision.

The Court concluded that the Plaintiff’s claim was fundamentally financial in nature.

Even if the Plaintiff ultimately succeeded at trial, the likely remedy would be monetary compensation rather than sole ownership of the property. The Court noted that at most, the Plaintiff might establish an entitlement to a share of the Property’s value.

The Court also emphasized that there was no evidence the Property itself was unique or that damages would be insufficient.

This remains a recurring theme in Ontario CPL jurisprudence. Courts are generally reluctant to restrict dealings with land where a damages award can adequately compensate the Plaintiff.

The Defendant established that the mortgage was nearing renewal and that refinancing or sale could become difficult if a CPL was registered on title.

The Court accepted that the Defendant required access to the property’s equity to manage carrying costs, personal expenses, and her son’s university expenses.

By contrast, the Court found there was already substantial equity in the property that could satisfy a future monetary judgment if the Plaintiff succeeded.

While the Court did not determine the merits of the case, it noted that the Plaintiff had produced limited documentary evidence supporting his alleged financial contributions or improvements to the property.

The Defendant, on the other hand, provided tax records and additional evidence supporting her position that the Plaintiff functioned more as a tenant than a beneficial owner.

The Court held that the comparative strength of the evidence remained a relevant discretionary factor when balancing the equities.

In addition to seeking a CPL, the Plaintiff requested an order preventing the Defendant from selling, transferring, or encumbering the property pending trial.

The Court rejected that request as well.

Justice Kaufman held that the Plaintiff was effectively seeking security for judgment without meeting the stringent requirements necessary for a Mareva injunction.

There was no evidence the Defendant intended to dissipate assets or move them outside the jurisdiction to avoid enforcement of a future judgment. Simply having to enforce a judgment through ordinary civil procedures did not amount to irreparable harm.

First, establishing a triable issue is only the starting point. Courts will still closely examine whether the remedy sought is truly necessary.

Second, Ontario courts continue to distinguish between genuine proprietary claims and attempts to obtain pre-judgment security over a Defendant’s assets.

Finally, prejudice matters. Courts will weigh the real-world consequences that a CPL may impose on property owners, particularly where refinancing, sales, or significant financial obligations are involved.

Contact Pinto Shekib LLP at info@pintoshekib.ca or 416.901.9984 to schedule a confidential consultation about Certificates of Pending Litigation and real estate disputes in Toronto and Ontario more broadly.