Conventional and Unconventional Parties: How Documents are Engrossed and Executed

• Author: Brian Bucknall
• Profession: Osler, Hoskin & Harcourt LLP
• Pages: 23-46

Conventional

and

The

Law

regards

as

persons

with

distinct

and

separate

legal

rights only indi-

viduals

and

corporations.

—

Ground

J.1

I.

INTRODUCTION

The

title

to

this

paper, "Conventional

and

Unconventional Parties" begs

the

question:

why do we

care about

the

nature

and

status

of

parties

to

our

documents? Haven't

we

taken

for

granted

for

decades

the

ability

of

individuals

and

corporations

to

acquire,

hold,

encumber,

and

transfer

real

property? What more

is

there

to say on the

subject?

The

general line

of

analysis

is

obvious. Human beings have

the

power

to

deal with real property. Business corporations

and

corpora-

tions

without share capital

can

deal with real property.

How can

prob-

lems arise with principles

so

straightforward?

The

problem

may be

that

our

corporate

and

real estate practice

has

generated

a

variety

of new

vehicles that purport

to

hold property, even

in

circumstances where they

may

not,

in

fact,

be

allowed

to do so. Can

L.S.M.,

B.A.,

LL.B.,

LL.M.,

partner

at

Osier,

Hoskin

&

Harcourt

LLP.

I am

grateful

for

research done

by

several colleagues

at

Osier,

Hoskin

&

Harcourt

LLP.

I

wish

to

thank

Patrick

Callaghan,

Gary

Margolis,

and

Julie

Godkin.

Kucor

Construction

v.

Canada

Life

Assurance

Co.

(1997),

32

O.K.

(3d)

548 at

554.

23

Unconventional Parties:

How

Documents

are

Engrossed

and

Executed

Brian

Bucknall

i

24

Brian

Bucknall

a

general partnership

own

property?

Can a

limited partnership

own

property? What

is the

legal nature

of a

real estate investment trust?

Can

an

unincorporated trust

be a

party

to a

real property transaction?

The

simple principles

set out

above become complicated

as

proper-

ty

transactions become more convoluted.

The

convolutions

in our

trans-

actions raise

a

number

of

other issues. What

do our

clients think

is

being

accomplished

by

having

a

"nominee"

corporation hold property

on

their

behalf?

Is

having property held

by a

nominee

different

than hav-

ing it

held

by a

trustee?

Is a

bare trustee

different

than

a

nominee?

How

are

bare trustees

and

nominees

to be

distinguished

from

other trustees?

Frequently

both clients

and

their lawyers misunderstand

the

nature

of

the

parties they

are

using

and the

scope

of

those parties' abilities.

A

paper dealing simply with various types

of

parties

to

real estate

transactions might

be

expected

to be

relatively narrow

and

pragmatic

in

its

focus.

Oddly

enough,

a

narrow

focus

is

difficult

to

preserve.

Each

proposition gives rise

to a

corollary issue. Dealing with transactions

where

the

parties

are

human beings would seem

to be

relatively straight-

forward.

What

are the

legal consequences

however,

of a

human being

who

arranges

to

have property

fraudulently

transferred

to

himself

or

herself?

What

is the

legal consequence

of an

apparent

transfer

to a

human being

who

does not,

in

fact,

exist

or to a

corporation that

has

been

wound

up? I

will attempt

to

keep

my

remarks within

a

pragmatic

frame-

work,

but I

will give

in

from

time

to

time

to the

temptation

to

digress.

This paper will organize

itself

around

a

discussion

of a

series

of

par-

ties

—

individuals, corporations, partnerships,

and so

forth.

With regard

to

each type

of

party,

a

similar

set of

themes will

be

explored:

a)

In

what

way can a

party

be

correctly included

in

documents?

b)

In

what

way can a

party correctly execute documents?

c)

What

is the

consequence

of

including

a

party

in a

document

in an

incorrect

manner?

d)

What

is the

consequence

of

having

a

party execute

a

document

incorrectly?

While

I

wish

to

talk about parties

and how

they convey

and

hold

property,

I

will

not

attempt

to

review

the

manner

in

which complex real

estate transactions

and

large land developments

are

structured.

I

will

also

not

attempt

to

review

the

implications that

the use of one

type

of

party

or one

type

of

structure would have

for tax

purposes.

Since

this

paper deals substantially with

the

execution

of

docu-

ments,

some attention must

be

paid

to the

statutory

framework

governing

real

estate documents.

We are all

familiar

with

the

Conveyancing

and Law