Tuesday, November 13, 2012

Can a right of first refusal bind a non-party? Yes

 Benzie v. Hania, 2012 ONCA 766 provides a properly registered right of first refusal can bind a non-party:

[1]          Can a right of first refusal bind non-parties?  Is it registrable under the Land Titles Act, R.S.O. 1990, c. L.5 (the Land Titles Act)?  These questions lie at the heart of this appeal.     


[84]       The parties expressly consented to registration of the Agreement on title to the Property.  It has been so registered for almost twenty-five years.  It was properly registered at the outset; it remains properly registered today.  Accordingly, s. 71(2) operates and the interests of the holders of the right of first refusal are protected.     


Anonymous said...

If I'm understanding the context correctly, than it happened routinely in a jurisdiction in which I once practiced real estate. Tenants there were granted a right of first refusal to purchase that began with the signing of any sales contract on the unit or home which they rented. Under the terms of the right of first refusal law, the tenant had 15 days from notice of a contract ratification to declare if they wished to pursue a purchase of the property themselves.

So the seller - and important regarding this topic, the potential purchaser - would sometimes find their contract at a total standstill should a tenant choose to exercise their right of first refusal.

Even if the tenant did not ultimately complete the purchase, it might delay the settlement of the property beyond the originally stated settlement date, which obviously impacted the non-party purchaser.

Is that a good example of what you are pointing out, or am I misunderstanding the definition of a non-party?

James C Morton said...

No, I think you are right and make a good point