Simply put, a vesting order is a court order that passes legal title in lieu of a legal conveyance. It is an equitable remedy, and is, therefore, by its nature, discretionary, and results from a finding by a court that fairness demands that the court act in a way to transfer property from one party to another. Typically, this occurs once the court has determined that one party is entitled to ownership of specific property; another party has a legal or beneficial title to that property. It is appropriate that the title to the property be transferred to the entitled party by way of a court order.
Vesting orders have their roots in the law of equity; therefore, the key to obtaining a vesting order lies in persuading the court that fairness and justice require the court to grant the order. Alternatively, the failure to grant a vesting order will not be sufficient to ensure a fair or just result. In simple terms, the court has to be convinced that granting a vesting order will not cause any injustice.
Such orders may be appropriate in a variety of circumstances. In the insolvency context, a court-appointed receiver may be in possession and control of the property, and may wish to sell that property to a proposed purchaser. However, as the receiver is not the registered owner of the property, he/she may need to obtain an order from the court permitting the transfer of the property to the new purchaser and noting the transferee as the new legal owner of the property. In so doing, the receiver will also wish to effect the transfer of the property free and clear of any encumbrances and claims. A vesting order is an appropriate remedy, and the receiver will need to satisfy the court that this is the case.
In other contexts, a court may grant a vesting order where it has determined that a transfer of title is appropriate but, due to the nature of the legal proceeding, it is unlikely that an actual transfer of title can be effected on a consensual basis. This situation may arise in contentious family law disputes over property, or in civil disputes where the plaintiff is claiming specific performance, or where a party’s beneficial ownership interest in the property is disputed.
The other context under which a vesting order may be issued is where there is a purchase of land, and the owner of the land is out of the jurisdiction, dead, or cannot be found. The procedure here is usually that the purchaser applies to court by way of notice of motion clearly explaining the grounds under which purchase was made and the events after that. Supporting documents showing a successful sale must be explicitly attached to the sale agreement. The court will then go ahead to either grant the vesting order or not.
In case the court is convinced and grants the court order, the applicant should present the order to the Commissioner lands, and the order acts as a directive to the Commissioner to transfer the title into the applicant’s name.
In conclusion, vesting orders is an equitable remedy that cures a situation where a purchaser has bought the land. However, the vendor is not willing or able to effect transfer for various reasons. It, therefore, protects the rights of a purchaser.