Copyright 2017 by the UBC Real Estate Division

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1 DISCLAIMER: This publication is intended for EDUCATIONAL purposes only. The information contained herein is subject to change with no notice, and while a great deal of care has been taken to provide accurate and current information, UBC, their affiliates, authors, editors and staff (collectively, the "UBC Group") makes no claims, representations, or warranties as to accuracy, completeness, usefulness or adequacy of any of the information contained herein. Under no circumstances shall the UBC Group be liable for any losses or damages whatsoever, whether in contract, tort or otherwise, from the use of, or reliance on, the information contained herein. Further, the general principles and conclusions presented in this text are subject to local, provincial, and federal laws and regulations, court cases, and any revisions of the same. This publication is sold for educational purposes only and is not intended to provide, and does not constitute, legal, accounting, or other professional advice. Professional advice should be consulted regarding every specific circumstance before acting on the information presented in these materials. Copyright: 2017 by the UBC Real Estate Division, Sauder School of Business, The University of British Columbia. Printed in Canada. ALL RIGHTS RESERVED. No part of this work covered by the copyright hereon may be reproduced, transcribed, modified, distributed, republished, or used in any form or by any means graphic, electronic, or mechanical, including photocopying, recording, taping, web distribution, or used in any information storage and retrieval system without the prior written permission of the publisher.

2 LESSON 2 ESTATES AND INTERESTS IN LAND, THE SUBDIVISION OF LAND, AND TITLE REGISTRATION Required Reading 1. UBC Real Estate Division Real Estate Trading Services Licensing Course Manual. Vancouver: UBC Real Estate Division. Chapter 3: What the Purchaser Buys: Estates and Interests in Land Chapter 4: The Subdivision of Land and Title Registration in British Columbia Recommended Reading 1. Websites of Interest: Links are available on the Course Resources webpage under Course Materials. General Objectives The objective of this lesson is to familiarize students with the various estates and interests in land that can be acquired, transferred, subdivided, and registered. The lesson also introduces the creation of strata properties. Learning Objectives Upon completion of this lesson, a student should be able to: 1. describe the evolution of real property law in British Columbia; 2. explain the concept of an estate in land and describe the fee simple, life estate and leasehold estate; 3. explain the difference between an estate and an interest in land that is less than an estate; 4. explain what it means to say an interest runs with the land ; 5. describe the scope and extent of ownership of land; 6. define and be able to apply the tests that determine whether an item is a fixture or a chattel; 7. describe the two methods of co-ownership of land and the distinctions between them; 8. describe who owns the land; 9. describe the difference between Crown ownership, private ownership, and treaty settlement lands; 10. describe how land is subdivided; 11. explain the differences between traditional subdivisions, strata title subdivisions and air space parcel subdivisions; 12. describe how strata developments are created; 13. describe how the common law dealing with the transfer of estates and interests in land has been changed by the Torrens system of title registration; 14. explain the underlying purpose of the Torrens system and how it is achieved; 15. list and explain the four main components of our Torrens system: the principle of indefeasibility, the registration principle, the abolition of the doctrine of notice, and the assurance fund; 16. describe the process for conducting a search of title; and 17. identify when a manufactured home must be registered.

3 2.2 Real Estate Trading Services Licensing Course Workbook Instructor's Comments Real estate professionals must be aware of the nature of interests in land so that they know what they are selling or evaluating. Does ownership of land include the air above that land, or the minerals below it? Does the value of a house include the bronze statue on the front lawn, or the bookcases in the family room? These are questions that are crucial to a proper valuation, and to an effective contract of purchase and sale. Chapter 3 essentially answers the questions What is real property and What do the common words land and ownership mean in the context of property law? Chapter 4 introduces the student to the legal system that the province of British Columbia employs to give effect to real estate transactions. Chapter 4 also introduces strata properties and discusses some of the key features of the strata concept. In times when few people could read or write, conveyancing was problematic. One can imagine, for example, that the holder of a lease or a life estate could pretend to be an owner and attempt to transfer the fee simple to an unsuspecting purchaser. Alternatively, a seller's land could be subject to rights of third parties, easements or restrictive covenants which the seller might not disclose. At common law the purchaser would nonetheless be taken to have purchased the land subject to these third-party rights. At common law, a fee simple owner's title to land or ownership of land was proven by producing all the relevant deeds and other documents affecting a particular piece of real property dating from the original grant from the Crown. Each new purchaser had to ensure that the chain of title was valid and not likely to be struck down because of some invalidity in a previous transaction. This system had a number of disadvantages. It made land transfers very expensive and subject to considerable delays. In some cases, it was necessary to resort to the courts to settle doubts as to title. There was no system of recording or registering these documents, which meant that mistake or fraud could arise. Few people could afford to safeguard their land title documents. There was the risk that deeds and other important documents could be lost or destroyed. Finally, the results of a title inquiry were never completely conclusive of title. There was always the possibility that someone would subsequently prove that an earlier transaction was tainted by mistake, fraud, etc., thus breaking the chain of title. There was clearly a need for a more efficient and reliable method of ascertaining title. British Columbia has attempted to solve this problem by adopting a system under which the actual title to land is registered, rather than just the documents affecting title. This so-called Torrens system is named after an Australian customs officer who believed that the same system of registration that had been successfully applied to the ownership of ships could be applied to the ownership of interests in land. The central feature of the Torrens system is the register of titles which contains the names of the holders of individual parcels of land within the jurisdiction, the nature of their interests and a full legal description of the property. As with most property law topics, understanding the historical context of our rules assists us in understanding our current systems. Keep this in mind while you read Chapter 4, paying particular attention to the discussion of the common law doctrine of the void deed when you read about the BC Torrens system and the attempt to solve the problems inherent in the common law system.

4 Lesson ASSIGNMENT 2 CHAPTERS 3 & 4: ESTATES AND INTERESTS IN LAND, THE SUBDIVISION OF LAND, AND TITLE REGISTRATION Marks: 1 mark per question. 1. Mike, Dave, John and Kevin are joint tenants of a very large condominium which they all occupy. Kevin suddenly dies in an unfortunate accident. In his will, Kevin leaves his interest in the property to his sisters, Sarah and Jennifer. Upon learning of Sarah's and Jennifer's intention to move into the condominium, Dave sells his interest in the condo to Fred, without the knowledge or consent of anyone else. When John and Mike learn of these events they decide not to let Fred, Sarah or Jennifer onto the property, arguing that the entire tenancy now remains in their hands. Which of the following statements is/are TRUE? A. Fred, Sarah and Jennifer have each acquired a legal interest in the condominium. B. For the transfer to Fred to be valid, he required the consent of John and Mike. C. John and Mike are tenants in common with each other in the condominium. D. Because neither Fred, Sarah nor Jennifer occupies the condominium, they have not acquired an interest in the condominium. (1) A only (2) B and C only (3) D only (4) None of the above 2. Hiroj dies leaving a will which states: I leave my property to my brother Hafiz for life without impeachment for waste, with remainder to my son Rafi. Which of the following statements is TRUE? (1) If Hafiz tears down the garage to make way for a basketball court, he will be liable to Rafi for voluntary waste. (2) If Hafiz plants an apple orchard in the back yard, he will be liable to Rafi for permissive waste. (3) Hafiz can destroy the buildings on the property so Rafi has nothing of value to inherit because he is not liable for any category of waste. (4) If Hafiz decided to destroy the buildings in order to spite Rafi, Hafiz would be liable to Rafi for equitable waste.

5 2.4 Real Estate Trading Services Licensing Course Workbook 3. When Andy gave up surfing, he decided to sell his beachfront bungalow to Bertrand. Shortly afterwards, he was struck with remorse and wanted his bungalow back. Checking the state of title at the land title office, Andy learned that Bertrand had not registered the transfer; he immediately mailed the purchase monies to Bertrand and demanded that he return the premises to Andy. Which of the following statements is/are TRUE? A. Under the Land Title Act, a conveyance must be registered in order to be enforceable between the parties to the contract. B. If before Bertrand registers the transfer, Andy sells the property to Clara for valuable consideration (and she is unaware of the earlier sale to Bertrand), and she registers the transfer, she would take title subject to Bertrand s superior right to the property. C. If Andy completed a second sale with an unsuspecting third party who registered the transfer before Bertrand, Bertrand could lose his interest in the property. D. Bertrand will be able to enforce the contract against Andy. (1) A and B only (2) C and D only (3) A and C only (4) D only 4. Heinrich is developing a 20 lot subdivision in the Fraser Valley in British Columbia. The area is heavily wooded and Heinrich wants to ensure that it will stay that way. He has included a building scheme in the development plan that is registered in the land title office. The building scheme limits the circumstances in which the existing trees on any of the lots can be cut down. Which of the following statements is TRUE? (1) This type of provision will not be enforceable unless the original owner reserves the right to waive it as against individual lots. (2) This type of provision must apply to at least half of the lots in the development unless certain lots are specified as exempt at the time of registration of the plan. (3) For a provision like this one to be valid, all the original purchasers must purchase their lots from the same seller. (4) All of the above 5. Alana owns an old marble statue that has been firmly affixed to the floor of the largest room in her house for nearly 50 years. She is planning on selling her house, but she wants to make sure that she can take the statue with her when she leaves. How should Alana proceed? (1) The statue is a fixture, so Alana can be certain that it will remain her property following the sale of her house. (2) The statue is a chattel, so when Alana sells the house, the statute will become the property of the new owners. (3) Alana should ensure that the contract of purchase and sale makes it clear that the statue will remain Alana s property following the sale of the house. (4) Alana should wait until after the contract of purchase and sale is completed, and then mention that she wants to keep the statue.

6 Lesson When William subdivided his property and sold three lake front lots, he retained a large lot back from the water, with a panoramic view. To protect the value of the lot he retained, he sold each lot subject to a restrictive covenant prohibiting any commercial use. These were properly registered. Over the next 10 years, the various owners of lots 1 and 2 had operated a campground and a motel on their lots, with no objection from William. However, when the new owner of lot 3 opened a marina, which meant too many boats around for William's liking, he brought an action for an injunction against the owner of lot 3 to prevent the operation of the marina because it contravened the restrictive covenant. Which of the following is TRUE? (1) William would easily succeed in an injunction against the owners of all 3 lots for the various commercial enterprises being operated. (2) William's failure to take action against the owners of lots 1 and 2 for 10 years may give a court grounds to cancel or modify the restrictive covenant. (3) A restrictive covenant cannot limit a person's ability to make a livelihood. (4) None of the above 7. Which of the following statements about the subdivision of land is TRUE? (1) Land can only be subdivided in compliance with section 73 of the Land Title Act, and regulatory approval is required. (2) The common law rules for subdividing land continue to govern. Fee simple owners can subdivide their land as they please, without any requirement to seek government or regulatory approval. (3) While fee simple owners can subdivide their land without regulatory approval, persons with life estate interests may not do so. (4) Land can no longer be subdivided. 8. Which of the following is an example of a restrictive covenant that is positive in nature and, as such, will NOT run with the land and bind subsequent owners? (1) No trees shall be planted on the northern 10 feet of the property. (2) Every subsequent owner must paint the fence once per year. (3) No pesticides shall be used on the property. (4) If a shed is built on the property, it shall not be taller than 10 feet. 9. Grandma has entered a contract with Wolf Renovations Inc. to have some improvements made on her cottage before she sells it. Wolf Renovations Inc. hires the Three Little Pigs Electrical Co. to assist in the renovations. 10 days after the job is completed, Three Little Pigs Electrical Co. files a builder's lien on the property, claiming that Wolf Renovations Inc. has not paid them even a penny for their labour. In response to this lien, when she pays Wolf Renovations Inc., Grandma holds back 5% of the total contract price for the work done. When Little Red Riding Hood, a prospective purchaser, looks at the cottage a week later, she expresses a concern over the lien registered on title. Grandma assures Red that if she buys the house, she will not have to worry about the lien because adequate money has been held back. Which of the following statements is TRUE? (1) Three Little Pigs Electrical Co. could properly file a caveat, thus preventing the transfer of the property to Red. (2) If Red buys the property and Wolf Renovations Inc. goes bankrupt, Red may be liable to Three Little Pigs Electrical Co. for the money owed to them. (3) If Red decides to buy the property, she has an automatic right to withhold 10% of the purchase monies since there is a builder's lien registered on title. (4) None of the above statements are true.

7 2.6 Real Estate Trading Services Licensing Course Workbook 10. Which of the following properties could be converted into a strata development pursuant to the Strata Property Act? (1) An existing apartment building with no strata plan currently filed (2) 10 acres of bare land with several buildings constructed upon the land (3) A newly created duplex with two separate entrances and separated living spaces (4) All of the above can be converted into strata developments 11. Sharon, the registered fee simple owner of Whiteacre, sold her interest to Anne. Anne did not register the transfer she received from Sharon. Some months later Sharon discovered that she was still the registered owner, so she sold the property again to Myron, who registered his transfer. Myron did not know about Anne's purchase and paid market value for the property. Anne has now discovered what has happened. Which of the following statements is TRUE? (1) Anne is the rightful owner of the property and she can have Myron removed from the title. (2) Although Anne cannot remove Myron from the title, she has a valid claim against the assurance fund. (3) Myron's title is indefeasible because he purchased bona fide for value from the registered owner. (4) Both (2) and (3) are true. 12. Three years ago, Bernard leased a warehouse from Harold for a 5-year term. Although Bernard was given a properly executed lease agreement, he failed to register it in the land title office. Which of the following statements is FALSE? (1) Bernard's interest is protected in any event because there are only two years left on the lease. Therefore, it is a lease for less than 3 years and does not have to be registered. (2) Harold is prohibited under section 20(1) of the Land Title Act from denying Bernard's leasehold interest on the grounds that the agreement was not registered. (3) Bernard's interest is still valid as against Harold. (4) Unregistered leases require actual occupation by the tenant is order to be protected from third parties. 13. Which of the following statements about a caveat is TRUE? (1) A caveat may be used for 3 months without removal to protect a claimed interest in land. (2) A caveat is not of itself a cause of action or an interest in land. (3) It is usual to register a certificate of pending litigation before a caveat. (4) The use of a caveat is a good way to tie up any further dealing in land regardless of the validity of the underlying claim. 14. Under the Land Title Act, registration: (1) is NOT required by the Act for a conveyance of land to be enforceable between the parties to the transfer. (2) is NOT necessary for leases for terms of greater than five years, as they are effective against all parties even if they are unregistered. (3) renders a charge indefeasible. (4) does NOT permit any indication of a trust on a registered title to land.

8 Lesson Alvin, Boris, Claus and Daria are the joint tenants of a property. Daria sells her interest to Xander. Which of the following statements is TRUE? (1) The sale destroys the joint tenancy and Alvin, Boris, Claus and Xander now hold the property as tenants in common with each other. (2) Daria cannot legally dispose of her interest without the permission of the other joint tenants, as it would affect the interests of the others. (3) Alvin, Boris and Claus remain joint tenants with each other, but become tenants in common with Xander. (4) None of the above 16. In which of the following situations would someone have a successful claim against the assurance fund? (1) Black owns Whiteacre. Mary forges a transfer to herself, registers it and then obtains a bank loan for $50,000 giving a mortgage of Whiteacre as security. (2) Bob owns Blackacre which is worth $1 million. Martin forges a transfer to himself, registers it and then sells the property for $1.2 million to Jim who registers the property and is unaware of the fraud. Upon completion of the sale to Jim, Martin disappears and cannot be found. (3) Gerald, the owner of Greenacres, gives a life estate in his property to his companion Jasmine. Subsequently, Jasmine sells her life estate to John. All necessary documents are registered in the land title office. In a fit of rage Gerald kills Jasmine to get his property back. (4) In all of the above situations a successful claim against the assurance fund might be brought. 17. A strata plan must show all of the following EXCEPT: (1) the Schedule of Unit Entitlement. (2) the names of all of the registered owners of the strata lots. (3) the boundaries of the land. (4) the area of each strata lot in square meters. 18. In which of the following examples could a joint tenancy exist between all of the parties? A. Laura transferred her summer cottage to her 3 children. The eldest received a 2 undivided interest and the two younger children each received a 3 undivided interest. B. Leopold and Nan purchased property as equal owners of an undivided interest. Later, Leopold transferred his share in the property to Wolfgang who then shared the property equally with Nan. C. Robert owned a house. When he married Lina, he transferred the property to himself and Lina as equal owners of an undivided interest. D. Jen and Dawn owned a house together as equal owners entitled to an undivided interest. Dawn became increasingly jealous of Jen and secretly sold her interest to her mother who registered the transfer. (1) C only (2) B, C, and D only (3) All of the above (4) None of the above

9 2.8 Real Estate Trading Services Licensing Course Workbook 19. Which of the following individuals holds an interest in land that is less than an estate? (1) Meredith has the right to live in Greyacre until the death of her mother. (2) Avram has a licence to sell popcorn from a street vendor's stall on the Stanley Park seawall. (3) Under his uncle's will, Ian inherited a remainder fee simple interest in a farm after the death of his aunt, who was left a life interest in the farm. (4) Hiram has a registered easement over the property of his neighbour granting him access to a fishing lake. 20. Kevin is the registered fee simple owner of Orangeacre. David forged a transfer of the fee simple from Kevin to himself and registered the transfer. David then approached ABC Trust Company and arranged a mortgage of Orangeacre. ABC advanced $100,000 to David and registered its mortgage against Orangeacre. Kevin has just discovered what has occurred. Which of the following is TRUE? (1) Because David forged the transfer of the fee simple to himself, Kevin can have David removed from the title. (2) ABC is entitled to its mortgage because it dealt with the registered fee simple owner of Orangeacre. (3) ABC can successfully claim against the assurance fund for money to satisfy the mortgage. (4) All of the above End of Assignment 2