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In support of this statement, the LTPM refers to Westsea Construction Ltd. v.
Land Title Office.34 That case involved the refusal of the registrar to register
a document that purported to give a mortgage priority, under what was then
s. 202 of the LTA, over an already registered possibility of reverter. (Section
202(1) of the LTA was repealed in 2003. Section 207(1) is the replacement
section.) The issue arose in the context of a fractional interest development.
In this case, the possibilities of reverter were still all held by the developer,
although as noted above, I am aware of one development where the possibilities
of reverter were assigned by the developer. At issue was whether the
possibility of reverter was a charge. If found to be a charge, its priority could
be altered by registration of the priority agreement.
The registrar argued that while a possibility of reverter is registered “in
the same manner as a charge” under s. 10 of the PLA, that section deals only
with the process of registration and does not make a possibility of reverter
a charge for the purposes of s. 202 of the LTA.35 The B.C. Supreme Court
agreed and held that the possibility of reverter is a limitation on the grant
of the fee simple. “It is not a charge.”36 The court continued:
At common law a possibility of reverter was not alienable inter vivos
because they were not themselves estates, but merely special rights incident
to other estates.
Section 8(1) of the Property Law Act provides statutory authority for the
disposition of possibility of reverters.37
That all makes sense. I note a caution, later in the case, about taking
security on a determinable fee simple:
When a possibility of reverter is registered, the registration provides
notice that a fee simple has been converted into a determinable fee. It
does not give notice of a s. 202(1) charge because the possibility of
reverter is not a s. 202(1) charge. The registration is notice that the fee
simple no longer exists.
Charges prior to the conversion continue as charges against both the
determinable fee and the possibility of reverter. Subsequent charges will
apply against only that interest to which they apply.
To grant a mortgage of a determinable fee priority over a possibility of
reverter would not enhance a mortgagee’s security because, if a determining
event occurred, the determinable fee would cease to exist in the
creation of an absolute fee simple held by whomever or whatever was
entitled under the reverter. The mortgagee could be protected only if the
mortgage holder also was mortgagee of the possibility of reverter.38
Not only is this an interesting comment on taking security, but also the
passage reinforces the alienability of a possibility of reverter by referring to
a possible granting of a mortgage charging the possibility of reverter.