An Alberta property owner discovers an unregistered claim by a distant relative stating they have an equitable interest in the land. Which statement best reflects the Torrens System's impact on this unregistered claim if the owner proceeds to sell the property to a bona fide purchaser for value without notice?

Question: An Alberta property owner discovers an unregistered claim by a distant relative stating they have an equitable interest in the land. Which statement best reflects the Torrens System's impact on this unregistered claim if the owner proceeds to sell the property to a bona fide purchaser for value without notice?

Answer options:

• The new purchaser will be bound by the equitable interest regardless of registration, due to historical common law principles. ✅ The new purchaser's Certificate of Title will likely be free of the unregistered equitable interest, as the Torrens System prioritizes registered interests, protecting bona fide purchasers without notice.
• The Land Titles Office will intervene to force the registration of the equitable interest before allowing the sale.
• The seller is legally obligated to compensate the relative for their equitable interest from the sale proceeds.

Correct answer: The new purchaser's Certificate of Title will likely be free of the unregistered equitable interest, as the Torrens System prioritizes registered interests, protecting bona fide purchasers without notice.

Explanation: A cornerstone of the Torrens System is that registration creates title and provides notice. A bona fide purchaser for value and without actual notice of an unregistered equitable interest typically takes title free of such interests, as the system aims to make the Certificate of Title the conclusive and authoritative record of ownership and encumbrances. Unregistered interests are generally not binding on such a purchaser.