It is during the signing of the sales agreement that the transfer of ownership normally takes place, even if registration has not yet been completed.
Insurance is certainly a complex world. However, there remains a basic principle: the insured must have an insurable interest.
The seller is the sole owner of a fishing boat. Like any prudent owner, he takes out an insurance policy to cover the potential loss of the boat. Following a sales agreement, the seller signs a sales contract with the buyer. The buyer assumes the seller's mortgage with the consent of the creditor. The buyer takes possession of the boat, installs certain equipment, and sets sail.
Before the registration form under the Canada Shipping Act is registered, the boat sinks "and disappears into the depths of the Gulf of Saint Lawrence".
The insurer, having refused to indemnify the seller, the seller then turns to the Court*. The seller claims that, at the time of the sinking, he still owned the boat since, under the Canada Shipping Act, it is at the time of registration of the form that the right of ownership is deemed to be transferred to the buyer. Conversely, the court concludes that the transfer of ownership took place at the time of the signing of the sales agreement. It adds that it is difficult to conceive that the seller can sell the boat and subsequently claim that the insurer cannot "oppose this transaction since the registration has not yet been completed".
Generally, once the ownership of a property is transferred, the seller no longer has an insurable interest in the sold property. It is essential that the buyer ensure in advance or that the seller's insurer accepts the transfer of the policy before the transaction.
Be warned, it seems easier to keep your insurance than your insurer.
*CS 150-05-002609-016, 2004-01-28
