Mareva Injunctions: A Powerful Tool for Protecting Real Estate Deals

Real estate transactions involve significant investments and complex negotiations. Buyers and Sellers alike are always on the lookout for effective measures to safeguard their interests during the deal-making process. One valuable legal tool available to parties involved in real estate deals is the Mareva injunction.

A Mareva injunction, also known as a freezing order or asset preservation order, is a Court Order that prevents a party from disposing of or dissipating their assets pending the resolution of a legal dispute. The purpose of this injunction is to ensure that assets remain available to satisfy a potential Judgment, thereby preventing individuals from evading their financial obligations.

In the context of real estate deals, a Mareva injunction can be particularly useful in situations where there is a risk that a party might dispose of their assets, including real property, with the intention of frustrating or evading a potential claim.

These are some potential applications:

  1. Fraudulent Conveyance: In cases where there are concerns regarding fraudulent conveyance, such as the transfer of property with the intent to defraud creditors, a Mareva injunction can be sought. This prevents the party involved from disposing of the property while the Court assesses the legitimacy of the transaction, therby ensuring that the property remains available to satisfy any potential Judgment.
  2. Breach of Contract: If one party has breached a real estate contract, such as failing to complete the sale or unlawfully attempting to terminate the agreement, the injured party can seek a Mareva injunction. This prevents the defaulting party from disposing of any relevant assets, including real estate, during the legal proceedings.
  3. Misappropriation of Funds: In situations where funds related to a real estate transaction have been misappropriated, a Mareva injunction can be an effective means of preventing the party responsible from dissipating their assets. By freezing their assets, including any real estate properties, the injured party can increase their chances of recovering the misappropriated funds.

Obtaining a Mareva injunction in Ontario requires the party seeking the injunction to satisfy certain criteria set out by the Courts. The criteria typically include:

  • demonstrating a strong prima facie case,
  • providing evidence of a real risk of dissipation of assets, and
  • showing that the balance of convenience favors granting the injunction.

A Mareva injunction serves as a potent legal tool for parties seeking to protect their interests by preventing the dissipation of assets, including real estate properties. By obtaining a Mareva injunction, individuals involved in real estate transactions can enhance their chances of securing a favorable outcome in the event of a dispute.

Brian Madigan LL.B., Broker

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