Settlement – Requirements to Clear Title for Canadian Grain Delivered to the U.S.

What is required to prove clear title to Canadian grain delivered to U.S. elevators?

In the U.S. if grain that has a perfected lien against it is sold into commerce, the buyer may
face the risk of paying twice for the same amount of grain. State laws vary on this aspect of
risk to the elevator (for example, in some states certain liens may have priority), but
generally the various states have implemented methods to track lien grain through either
direct notification systems (requiring the lender to notify potential buyers) or through a
central filing system that permits the buyer to check a central information system regarding
lien status and whether grain can be purchased with a clear title. As of this writing, it is not
well understood how Canadian law might be applied to Canadian grain marketed in the U.S.
so that clear title can be assured and confirmed. And it is not clear how easy it will be for
U.S. buyers to track the existence of liens on Canadian grain. Canadian producers who
intend to market wheat in the U.S., particularly where the producer does not have a
previously established trading relationship with a U.S. elevator, may wish to contact the elevator prior to delivery to establish a reasonable method to determine clear title. In the
event no advance contact is made with the elevator, if a truck shows up with a load of grain,
the Canadian seller should expect the elevator manager to request some demonstration of
clear title and/or contact information for Canadian parties that can be contacted to
establish reasonable assurances that the grain being sold is free and clear of any liens.

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