INTRODUCTION AND BRIEF DESCRIPTION
This section criminalizes vendors, mortgagors, solicitors or agents who conceal information or falsify documents related to property or a chose in action with the intent to defraud a purchaser or mortgagee.
SECTION WORDING
385(1) Every one who, being a vendor or mortgagor of property or of a chose in action or being a solicitor for or agent of a vendor or mortgagor of property or a chose in action, is served with a written demand for an abstract of title by or on behalf of the purchaser or mortgagee before the completion of the purchase or mortgage, and who (a) with intent to defraud and for the purpose of inducing the purchaser or mortgagee to accept the title offered or produced to him, conceals from him any settlement, deed, will or other instrument material to the title, or any encumbrance on the title, or (b) falsifies any pedigree on which the title depends, is guilty of an indictable offence and liable to imprisonment for a term not exceeding two years.
EXPLANATION
Section 385(1) of the Criminal Code of Canada deals with fraudulent conduct related to the sale or mortgage of property or chose in action. The provision applies to vendors, mortgagors, solicitors, and agents who are served with a written demand for an abstract of title by the purchaser or mortgagee before the completion of the transaction. The provision prohibits two types of conduct - concealing material information regarding the title or encumbrances, and falsifying any pedigree on which the title depends. The intent behind such conduct should be to defraud the purchaser or mortgagee and induce them to accept an inferior title. A title is essentially the legal ownership of property, and title searches are performed to ensure that the seller or mortgagor has the legal right to sell or mortgage the property as claimed. Abstracts of title are documents that provide a summary of the legal history of the property, and they may contain information about any settlements, deeds, wills, or encumbrances that affect the title. If a vendor, mortgagor, solicitor, or agent withholds or falsifies information, they may be found guilty of an indictable offense and face imprisonment for up to two years. The provision aims to protect purchasers and mortgagees from being deceived and suffering financial harm due to fraudulent conduct related to property transactions. Overall, Section 385(1) of the Criminal Code of Canada serves as a deterrent to fraudulent conduct related to property and upholds the integrity of property transactions.
COMMENTARY
Section 385(1) of the Criminal Code of Canada deals with fraudulent misrepresentation by vendors or mortgagors of property or a chose in action, or their solicitors or agents. The section criminalizes the act of concealing important documents or information related to the property title or falsifying any pedigree on which the title depends, with an intention to defraud the purchaser or mortgagee. Such conduct is considered a serious offence, punishable by a maximum imprisonment term of two years. This provision reflects the importance of title search in property transactions. Title search involves verifying the legal ownership of a property, as well as any claims or encumbrances on it, such as mortgages, liens, or easements. It is a crucial step in the real estate process, as it helps the purchaser or mortgagee to assess the risks and value of the property, and ensure they are getting what they are paying for. However, not all vendors or their representatives may be forthcoming with this information. Some may intentionally conceal important documents or information related to the title, such as pending lawsuits, tax liens, or zoning restrictions, in order to convince the purchaser or mortgagee to accept the title. Such actions can have disastrous consequences for the purchaser or mortgagee, who may later discover undisclosed liabilities or defects, and may lose their investment or face legal action. Therefore, the Criminal Code makes it a criminal offence to intentionally conceal such information, with an intention to defraud the purchaser or mortgagee. The term "intent to defraud" implies a deliberate attempt to deceive or mislead the other party, with a view to gain an advantage. The offender must have known or ought to have known that the suppression of the information would materially affect the decision of the other party to enter into the transaction. The offence is not limited to the vendor or mortgagor, but also includes their solicitors or agents who act on their behalf. This recognizes that such professionals have a duty to act in the best interests of their clients, and to disclose all material information related to the property. Blame cannot be shifted solely on the vendor or mortgagor, but also their representatives who have knowledge of the property and its title. The penalty for this offence is imprisonment, which can range from a minimum of six months to a maximum of two years. The severity of the penalty reflects the gravity of the offence, and serves as a deterrent to others who may contemplate such actions. The criminal record resulting from a conviction can also impact the offender's future prospects, including their ability to obtain credit or enter certain professions. In conclusion, section 385(1) of the Criminal Code of Canada represents an important protection for purchasers and mortgagees, by criminalizing fraudulent misrepresentation related to property transactions. It highlights the importance of full disclosure and transparency in such dealings, and provides a remedy for those who fall victim to such actions. Its provisions are a significant feature of Canada's real estate laws, and have contributed to the stability and fairness of the country's property market.
STRATEGY
Section 385(1) of the Criminal Code of Canada outlines the criminal offense of fraudulently concealing or falsifying information related to the title of a property or chose in action. This provision is particularly relevant in the real estate industry, where vendors, mortgagors, solicitors, and agents are often involved in property transactions. As such, it is important for these individuals and their legal representatives to understand the strategic considerations and potential strategies that can be employed when dealing with this section of the Code. One key strategic consideration when dealing with section 385(1) is to ensure that all relevant information related to the title is disclosed to the purchaser or mortgagee. This includes settlements, wills, deeds, or other instruments that may impact the title, as well as any encumbrances that may exist. Failing to disclose such information can result in criminal charges and penalties under the Code, as well as potential civil liability. To avoid running afoul of section 385(1), vendors, mortgagors, solicitors, and agents should ensure that they obtain and review a complete abstract of title and make all necessary disclosures. This can include seeking legal advice to determine the scope of information that must be disclosed, as well as conducting thorough due diligence to identify any potential issues or encumbrances on the title. Another strategy that can be employed when dealing with section 385(1) is to ensure that all documentation related to the transaction is accurate and complete. This includes ensuring that any pedigrees on which the title depends are not falsified or misrepresented. Any inaccuracies or omissions in the documentation can also result in criminal charges and penalties under the Code. To help ensure accuracy and completeness, vendors, mortgagors, solicitors, and agents may wish to employ the services of experienced real estate professionals and legal representatives. These experts can assist with the preparation of documentation and ensure that all relevant information is disclosed in a timely and appropriate manner. Finally, it is important to note that section 385(1) carries serious criminal penalties, including imprisonment for up to two years. As such, it is essential that individuals and their legal representatives take all necessary steps to comply with the provisions of the Code and avoid any potential criminal liability. In summary, section 385(1) of the Criminal Code of Canada creates a criminal offense related to the fraudulent concealment or falsification of information related to the title of a property or chose in action. To avoid potential criminal liability, individuals and their legal representatives should ensure that all relevant information is disclosed, documentation is accurate and complete, and they seek the advice of experienced real estate professionals and legal representatives where necessary. By taking these steps, they can help ensure compliance with the Code and avoid any potential criminal penalties.