All About Estates

Automatic Vesting (Lazy Executors Hate This One Simple Trick!)

An estate trustee is responsible for distributing the property of the deceased to those who are beneficially entitled to it (either in accordance with the terms of the relevant testamentary instrument or, where there is no such instrument, in accordance with the rules set out in the relevant legislation). What happens when an estate trustee ‘forgets’ to distribute some of the deceased’s property? In Ontario, Section 9 of the Estates Administration Act, RSO 1990, c E.22 provides the answer, at least when we are dealing with real property (e.g., a house, condominium, etc.).

Section 9 of the Estates Administration Act reads: “Real Property not disposed of, conveyed to, divided or distributed among the persons beneficially entitled thereto… by the personal representative within three years after the death of the deceased is… at the expiration of that period, whether probate or letters of administration have or have not been taken, thenceforth vested in the persons beneficially entitled thereto under the will or upon the intestacy or their assigns without any conveyance by the personal representative…”

In other words, if an estate trustee fails to distribute real property to those beneficially entitled to it within three years of the deceased’s date of death, the real property automatically “vests” in the beneficiaries. When the property vests, it is legally transferred to the beneficiaries such that it no longer forms part of the deceased’s estate.

There are some notable exceptions to automatic vesting under Section 9 of the Estates Administration Act. First, an estate trustee is entitled to register a “caution” on the property. This has the effect of restarting the three-year period, such that automatic vesting does not occur until the third anniversary of the caution. The estate trustee can renew the caution before it expires, which would again restart the three-year period. Second, the Will (if there is one) may prevent the real property from vesting after three years. This will be the case when Will gives the estate trustee the power to sell the property at such time and in such manner as the estate trustee sees fit.

Automatic vesting under Section 9 of the EAA is not the end of the story. It is still necessary for the beneficiaries to become registered owners in the land titles system. This typically requires a court order. Under Section 100 of the Courts of Justice Act, RSO 1990, c C.43, a “Court may by order vest in any person an interest in real or personal property that the court has authority to order be disposed of, encumbered or conveyed.”

Vesting orders allow courts to effect a change of title in circumstances where the parties have been directed to deal with property in a certain manner but have failed to do so. In order for a court to issue a vesting order, the person seeking to be registered on title must have a “separate, valid claim to possession or ownership by virtue of statute, common law, or equity” (Estate of Harold James Saunders et al v Isaac, 2023 ONSC 4145, at para. 38).

If the estate trustee has ‘forgotten’ to distribute real property to the beneficiaries within three years of the deceased’s date of death, the beneficiaries will gain a separate, valid claim to possession or ownership of the property. As discussed, this is by virtue of Section 9 of the Estates Administration Act. This should be sufficient for a court to exercise its discretion to grant a vesting order, which can be taken to the land registry office to have the new owners registered on title.

Christopher Cook is a lawyer at de VRIES LITIGATION LLP, specializing in estate, trust, capacity, and guardianship disputes. More of Christopher's blogs can be found at https://devrieslitigation.com/author/ccook/

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