Purchaser’s Liens Trump Judgment Creditors Claims (British Columbia)

The typical secured creditor is a lender. Frequently, however, purchasers of real property can also become secured creditors through the mechanism of a purchaser's lien. These liens are a boon for purchasers, but can be troublesome for creditors as the liens will often take priority over other financial charges, including registered unsecured judgments.

The scope and priority of purchaser's liens were recently examined in the case of Pan Canadian Mortgage Group.¹ The British Columbia Supreme Court explored their history, noting that when a purchaser of real property provides a deposit or other funds to the vendor in part or whole payment of the purchase price, the purchaser's lien forms an equitable charge over the property. The purchaser thus becomes a secured creditor in the property to the extent of the payments made.²