Case snapshot
At a glance
- Case
- Can a CPL Be Placed on a Home to Protect a Fraud Claim in Ontario?
- Court / Tribunal
- Ontario Superior Court of Justice
- Citation
- 2026 ONSC 3559 ↗
- Date
- June 19, 2026
- Area of law
- Litigation Law
- Key issue
- Whether certificates of pending litigation should be issued against three properties allegedly transferred to defeat a $500,000 investment creditor.
- Outcome
- The court granted a CPL on one property, ordered $500,000 held in trust from the sale proceeds of a second, and refused a CPL on a third property where a child's stability was a countervailing factor.
- Why it matters
- Anyone who has invested money and suspects the borrower is transferring assets to avoid repayment needs to know that Ontario courts can freeze or encumber real property before a trial is ever held.
Legal principle
The rule from this case
A certificate of pending litigation (CPL) is a legal notice registered on title to real property that signals to the world that someone has a court claim affecting that land. In Ontario, a court will grant a CPL when the applicant shows the underlying lawsuit has a high probability of success and that the balance of convenience favours the registration. Where a creditor can point to 'badges of fraud' — red flags such as transfers to family members or insiders, no listing on the open market, and timing that coincides with a debt coming due — courts will draw a strong inference that the transfer was intended to defeat creditors under the Fraudulent Conveyances Act. The court does not need proof of a secret plan; the circumstances themselves can be enough to justify interim protection of the creditor's claim.
Important limits
What this does not mean
A CPL is not a judgment. Registering a CPL on title does not mean the property owner has been found liable or that the creditor will ultimately win at trial. It is a temporary protective measure that prevents the land from being quietly sold or mortgaged while the litigation proceeds. This decision also does not mean courts will automatically freeze every property connected to a defendant. The judge here refused a CPL on one property specifically because a child lived there and the disruption to that child's stability outweighed the creditor's need for that particular security — especially when adequate protection was already available through the other two properties. Courts tailor relief to the specific facts and equities of each situation.
What Is a Certificate of Pending Litigation and Why Does It Matter?
A certificate of pending litigation (CPL) is a notice registered directly on the title of a property, warning anyone who searches that title that a court claim exists affecting that land. It effectively puts a property on hold — a buyer or lender who sees a CPL knows the ownership is in dispute, making the property very difficult to sell or mortgage until the litigation is resolved.
For creditors who believe a debtor is moving assets out of reach, a CPL can be a critical tool. In Crepulja et al v. Masterson et al, 2026 ONSC 3559 (CanLII) [https://www.canlii.org/en/on/onsc/doc/2026/2026onsc3559/2026onsc3559.html], the Ontario Superior Court of Justice examined whether three separate properties should be encumbered to protect a creditor’s claim arising from an alleged $500,000 investment that was never repaid.
Did the Underlying Lawsuit Have a Strong Enough Claim?
Yes — the court found the main action had a high probability of success, which is the first hurdle a creditor must clear. The investment of $500,000 was not seriously disputed, and no principal had ever been returned. That straightforward picture of an unpaid debt was enough for the court to conclude that damages would be at least equal to the principal plus interest.
This matters because courts do not grant CPLs simply because a lawsuit has been filed. The creditor must demonstrate the claim is genuinely strong, not just arguable. A clear, documented breach of an investment agreement — with no repayment and no credible defence to the core obligation — met that standard here.
What Are ‘Badges of Fraud’ and Were They Present Here?
Badges of fraud are circumstances that, taken together, suggest a transfer of property was designed to put assets beyond the reach of creditors rather than reflecting a genuine arm’s-length transaction. No single badge is conclusive, but courts look at the overall picture.
In this case, the court identified several concerning features: the properties were transferred to parties who were not at arm’s length from the transferor, the transactions were completed within a short window rather than through an open-market listing process, and the roles of the individuals involved as both real estate agent and lawyer created a conflict that added to the court’s concern. Applying the framework from Indcondo v. Sloan, the court found these badges supported a strong inference of intent to defeat the creditor, rejecting arguments that the transfers reflected fair market value or innocent timing.
How Did the Court Weigh the Balance of Convenience on Each Property?
The balance of convenience is the second key test: even if the claim is strong, a court must weigh the harm to the creditor if no CPL is granted against the harm to the property owner if it is. The court reached different conclusions for each of the three properties.
For the first property (Hadfield), the defendants were living there rent-free, and the creditor’s need to protect the claim outweighed any hardship. A CPL was granted. For the second property (Milcroft), the property had already been sold, so a CPL was no longer practical — instead, the court ordered $500,000 of the sale proceeds to be held in trust, preserving the creditor’s security without over-encumbering. For the third property (Coles), the court refused the CPL because a child’s stability and living situation at that home was a genuine countervailing factor, and the protection available through the other two properties was already sufficient.
Can a Court Order Sale Proceeds Held in Trust Instead of a CPL?
Yes, and this case is a good example of courts crafting flexible remedies. When a property has already sold, registering a CPL on title is no longer possible. Rather than leaving the creditor unprotected, the court ordered a portion of the sale proceeds — matching the amount of the claim — to be held in trust pending the outcome of the litigation.
This approach avoids over-securing the creditor (which would be unfair to the defendants) while still ensuring the money does not disappear before a judgment can be enforced. It reflects the principle that courts will tailor interim relief to the actual equities of the situation.
What Role Did the Defendants’ Professional Roles Play?
The court took note of the fact that the individuals involved wore multiple professional hats — acting as both a real estate agent and a lawyer in transactions that directly benefited them. This overlap created a conflict of interest that the court viewed as a further red flag when assessing the overall picture of the transfers.
This is a reminder that professional obligations do not disappear when someone is also a party to a transaction. Courts scrutinize situations where a professional’s personal financial interests and their duties to clients or counterparties become entangled.
Practical Takeaways for Creditors and Investors
- Document everything. A written investment agreement with clear repayment terms is what allowed the creditor here to establish a high probability of success quickly. Verbal arrangements are much harder to enforce.
- Act promptly. The value of a CPL depends on speed. If a debtor is already moving properties, every day of delay increases the risk that assets disappear before you can protect them.
- Watch for badges of fraud. Transfers to family members, below-market sales, no MLS listing, and suspicious timing are all warning signs that assets may be being hidden. These are exactly the facts courts look for.
- Understand that courts balance equities. You may not get a CPL on every property you identify. Courts will look at the full picture, including who lives in the home and whether other security is already available.
- Seek legal advice before assets move. Our Ontario litigation lawyers can advise on whether a CPL, an injunction, or another form of interim relief is the right tool for your situation.
If you are in the Hamilton or Burlington area and believe a debtor is transferring assets to avoid repayment, our Burlington litigation team and Hamilton litigation lawyers are available to discuss your options.
UL Lawyers offers a free initial consultation from our Burlington office and serves clients across Ontario. If you are concerned about protecting a financial claim against real property, reach out to our civil litigation team to discuss next steps.
This article is automated commentary on a public court decision and is for general information only — not legal advice. Decisions rely on facts unique to each case. If you are affected by a similar issue, contact a lawyer for advice specific to your situation.
FAQ
Frequently asked questions
A CPL remains on title until it is vacated by court order, discharged by the party who registered it, or removed at the end of the litigation. There is no automatic expiry date, which is why defendants sometimes bring motions to have a CPL removed if they believe it was improperly granted.
Yes. Ontario courts can discharge a CPL if the property owner pays money into court or provides other acceptable security equivalent to the value of the claim. This allows the property to be sold or mortgaged while still protecting the creditor's interest.
The Fraudulent Conveyances Act is an Ontario statute that allows courts to set aside transfers of property made with the intent to defeat, hinder, or delay creditors. If a court finds the transfer was fraudulent, it can treat the property as if it was never transferred, making it available to satisfy the creditor's judgment.