00-02 : Conveyancing Practices under the Western Law Societies Conveyancing Protocol (Manitoba)

Purpose of the Protocol

The Western Law Societies Conveyancing Protocol (“the Protocol”) is a joint initiative of the Law Societies of Alberta, British Columbia, Manitoba and Saskatchewan. The project was mandated to respond to the many changes in the residential real estate conveyancing and financing marketplace within which lawyers provide legal services to the public. The Protocol contemplates a new conveyancing practice, which is designed to expedite the residential mortgage process for lenders, to ensure consumers have continued access to independent legal advice, and to preserve the integrity of the Torrens land titles system and survey fabric in western Canada.

Each law society has developed a Real Estate Conveyancing Protocol which is tailored for use in that province. The Protocols reflect jurisdictional differences in law and procedure, but are consistent in their fundamental purposes, which are:

1. to allow for the release of mortgage proceeds and other purchase funds on closing, for the mutual benefit of purchasers, vendors and mortgagees (since existing conveyancing practices in British Columbia effectively achieve this, the Protocol of that province does not address funding issues);
2. to encourage the continued exercise of due diligence by purchasers in survey matters; and
3. to enable lawyers to satisfy the unique security requirements of mortgagees without obtaining a building location certificate.

The Protocol and this Practice Direction took effect on February 15, 2001. Thereafter this Practice Direction applies to the Protocol as it may be revised from time to time.

Protocol Closing

Members of the profession in Manitoba:

1. acting on behalf of purchasers of residential property may release funds to the vendor’s solicitor for disbursement to the vendor’s order before the transfer (and accompanying mortgage, if applicable) are submitted to the land titles office for registration, if they have complied with the Protocol;
2. acting on behalf of mortgagees of residential property may advance mortgage proceeds to the mortgagor’s order before the mortgage is submitted to the land titles office for registration, if they have complied with the Protocol; and
3. acting on behalf of vendors of residential property may disburse sale proceeds before the transfer (and accompanying mortgage, if applicable) are submitted to the land titles office for registration, if they have complied with the Protocol, and subject to any trust conditions to the contrary.

Members of the profession acting on behalf of mortgagees of residential property may advise their mortgagee-clients that a current building location certificate and a zoning memorandum are not required, if the member has complied with the Protocol.

The existing professional liability insurance coverage afforded to all members will respond to:

1. claims resulting from actual loss to a purchaser due to an intervening registration which impairs the purchaser’s title; and
2. claims resulting from actual loss to a mortgagee:
   1. due to an intervening registration which takes priority over the mortgage; or
   2. due to a survey defect which was unknown at the date of advance but which would have been disclosed by an up-to-date building location certificate or zoning memorandum.

In any of the above occurrences, where a claim is paid by the Professional Liability Claims Fund:

1. no deductible will be payable by the member; and
2. the payment will not be considered as a “Paid Claim” for purposes of future surcharges or graduated deductibles,

provided that the member has adhered to the practices prescribed by the Protocol. The usual insurance implications will apply to a claim arising from any other error or omission.

Non-Protocol Closing

Where members do not use the Protocol when completing a real estate transaction, the prudent practice for members to follow is not to release sale proceeds, regardless of the terms of any applicable trust conditions, until such time as title to the property being transferred has issued in the name of the purchaser and all other trust conditions imposed by the purchaser’s solicitor have been fulfilled, excepting only for conditions which the vendor’s solicitor can fulfill by payment out of the sale proceeds themselves. This is subject to the explicit terms of the offer to purchase contract between the parties to the transaction which could, conceivably, require funds to be released before title has issued.

The deductible obligations of the member under the governing policy of professional liability insurance will apply to any claim made against the member arising from a non-Protocol closing.