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Page 5 of 19
DIVISION 3 - NOTICE OF ADVERSE CLAIMS
Notice of adverse claim
25 A person has notice of an adverse claim if
(a) the person knows of the adverse claim,
(b) the person is aware of facts sufficient to indicate that there is a significant probability that the adverse claim exists and deliberately avoids information that would establish the existence of the adverse claim, or,
(c) the person has a duty, imposed by statute or regulation, to investigate whether an adverse claim exists and the investigation, if carried out, would establish the existence of the adverse claim.
Notice of adverse claims re representative
26(1) Having knowledge that a financial asset, or an interest in a financial asset, is or has been transferred in a transaction by a representative does not impose any duty of inquiry into the rightfulness of the transaction and is not notice of an adverse claim.
(2) Notwithstanding subsection (1), a person has notice of an adverse claim if that person knows that
(a) a representative has transferred a financial asset, or interest in a financial asset, in a transaction, and
(b) the transaction is, or the proceeds of the transaction are being used for the individual benefit of the representative or otherwise in breach of a duty owed by the representative.
Effect of delay
27 An act or event that creates a right to immediate performance of the principal obligation represented by a security certificate or that sets a date on or after which a security certificate is to be presented or surrendered for redemption or exchange does not by itself constitute notice of an adverse claim except in the case of a transfer that takes place more than
(a) one year after a date set for presentation or surrender for redemption or exchange, or
(b) 6 months after a date set for payment of money against presentation or surrender of the security certificate, if money was available for payment on that date.
Certificated security re notice of adverse claim
28(1) A purchaser of a certificated security has notice of an adverse claim if the security certificate,
(a) whether in bearer form or registered form, has been endorsed “for collection” or “for surrender” or for some other purpose not involving a transfer, or
(b) is in bearer form and has on it an unambiguous statement that it is the property of a person other than the transferor.
(2) For the purposes of paragraph (1)(b), the mere writing of a name on a security certificate does not in itself constitute an unambiguous statement that the security certificate is the property of a person other than the transferor.
29 The registration of a financing statement under the [Personal Property Security Act] is not notice of an adverse claim to a financial asset.