The Gazette 1976

N O V E M B E R

1976

G A Z E T T E

THE FAMILY HOME PROTECTION ACT 1976 by GARRETT GILL, S.C. By now most practitioners will be familiar with the terms of this short Act, passed on the 12th July, 1976, and will be aware that it creates many problems for Conveyancers. The Act creates a new kind of property right or equity affecting the "family home" and the household chattels of a married couple. In this country the family home and most of the household chattels generally belong to the husband, and for convenience in this article it will be assumed that this is always the case, but the Act is so framed as to protect the interests of whichever spouse is not the legal owner of the property in question. This article only deals with the Act as it affects title to land. The first point to note is that "Conveyance" is de- fined by Section I as including a mortgage (legal or equitable), lease, assent, transfer, disclaimer, release and any other disposition of property otherwise than by will or donatio mortis causa, and also an enforce- able agreement to make any such conveyance. "Family home" means a dwelling in which a married couple ordinarily reside and also a dwelling in which a "spouse whose protection is in issue" ordinarily resides, or, if that spouse has left the other spouse, ordinarily re- sided before so leaving. "Dwelling" includes a build- ing or part of a building occupied as a separate dwelling and the ground occupied with it or required for its amenity. Bearing in mind these definitions, we come to Section 3, which is the section of most concern to the lawyer dealing with conveyancing, title to land, and contracts for the sale of land. Section 3, subsection (1) provides that "Where a spouse, without the prior consent in writing of the other spouse, purports to convey any interest in the family home to any person except the other spouse, then, subject to subsections (2) and (3) and Section 4, the purported Conveyance shall be void". Subsection (2) merely excludes from this provision a conveyance made pursuant to an enforceable agreement entered into before the marriage. Subsection (3) says that a Conveyance shall not be void by virtue of subsection (1) if: (a) it is made to a purchaser for full value; (b) it is made by a person, other than the spouse making the purported Conveyance referred to in Subsection 1, to a purchaser for value; or (c) its validity depends on the validity of a con- veyance in respect of which any of the con- ditions mentioned in subsection (2) or para- graph (a) or (b) is satisfied. "Full value" is defined in subsection (5) as such value as amounts or approximates to the value of that for which it is given. "Purchaser" is defined in sub- section (6) as a person who in good faith acquires an estate or interest in property. Subsection (4) says that if any question arises in any proceedings as to whether a conveyance is valid by reason of subsection (2) or (3) the burden of proving validity shall be on the person alleging it. The difficulties created by Section 3 of the Act are very considerable. In the first place it should be noted that there is a "family home" on most farms, and the farm cannot be disposed of or mortgaged without the prior written consent of the owner's spouse unless

Land Commission Consent to subdivision is obtained. The owner of business premises frequently has his family home overhead and will not be able to sell or mortgage the building without his wife's prior written consent. So Section 3 has a wider effect than may at first be appreciated. As "Conveyance" includes an "enforceable agreement" to convey, it appears that neither party to a Contract for the sale of land will be bound by the Contract unless the prior written consent of the vendor's spouse was given. It is difficult to see how in such a case the agreement could be called an "enforceable agreement", but presumably this is to be read as "enforceable apart from the provisions of this Act". At first sight it may seem that Section 3, subsection (3) (a) will in most cases solve the problem: this says that subsection (1) shall not render a conveyance void if it is made to a purchaser for full value. But the purchaser must be one who acquires the property "in good faith" and "full value" must be such value as equals or approximates to the value of that for which it is given. We are all familiar with the general prin- ciples applicable in deciding whether or not a person is a purchaser "in good faith", and relating to notices or construction notices of equities; they are stated in Hals bury (3rd Edit., Vol. 14 at pp. 542-549). Section 3 of the Conveyancing Act, 1882, modifies somewhat the principle of construction notice, but subsection (7) of Section 3 of the present Act reduces the protection given by Section 3 of the Conveyancing Act, 1882. To be a purchaser "in good faith" one must, as a general rule, investigate the vendor's title, make all appropriate enquiries and receive satisfactory replies. If, for example, a material title deed is missing, its absence must be accounted for and it will be desirable to have the explanation verified by a statutory declaration: otherwise the purchaser's title may be affected by an equitable mortgage. Now what are the enquiries that ought reasonably to be made in connection with this new Act? In the first place, does the property for sale consist of, or include, a dwelling or part of a dwelling, or land that is an amenity of a dwelling? Then, is that dwelling a "family home"? This raises the question of whether or not the Vendor is married: if so, has he a spouse "whose protection is in issue" ? What is meant by this phrase? If there is no legal issue in being at the date of the Conveyance is the dwelling not then a "family home", or does the phrase cover the case where such an issue subsequently arises? In many cases the "issue" will arise only when the purchaser seeks to complete the purchase and obtain vacant possession. If the wife is away from home at the time no "issue" may arise until she returns, to find a purchaser in occupation. It would seem that, on any transaction involving a dwelling, or part of the grounds of a dwelling, an intending purchaser should ask (even before signing a Contract) and an intending mortgagee or lessee should ask, "Are you married?" "Did your spouse ever reside on the property or in any dwelling in respect of which the property in question was an amenity?" If the re- quest is in writing and the reply satisfactory, this may be sufficient to constitute the "purchaser" one who has dealt in good faith in the transaction, since Section 15 imposes heavy penalties on a person knowingly giving false information in reply to such a request: but it will not protect a purchaser who (or whose agent) has notice of facts indicating that the replies are incorrect. If a couple are living together as husband

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