The Continuing Legal Education Society of Nova Scotia Section Five Highlights of the Provisions of the New Municipal Government Act John R Cameron. Orlando & Hicks -------- Suite 1110-1660 Hollis Street, Halifax, Nova Scotia, CANADA B3] 1 V7 ------- Tel. 902 422 1716 or 800 577 1351 Fax. 902 429 7892 admin@cle.ns.ca http://www.cle.ns.ca
MUNICIPAL GOVERNMENT ACT Notes for Property Practitioners The Municipal Government Act, S.N.S. 1998, c. 18, consolidates a great many of the statutes affecting municipalities. It will be the new basic constitution for all municipalities. There will be, as of April 1, 1999, when it comes into effect. There will no longer be separate city charters (as it happens, there are no cities) and no special regional municipality legislation, no Municipal Act and no Towns Act. In the course of the consolidation the statutory provisions were extensively revised. As municipalities affect property interests in many ways, some of these changes will be of significance to property practitioners. The notes that follow direct attention to some of the more important changes. Practitioners should be careful to check the exact wording of the legislation where they may be affected by possible changes. There are 584 sections in the Act, and even those of us who were involved in the drafting cannot be certain we have identified all of the important points. The Municipal Government Act consolidates the tax collection provisions of the Assessment Act, the Deed Transfer Tax Act, the regional government acts, the Municipal Act, the Municipal Affairs Act, the Municipal Boundaries and Representation Act, the Planning Act and the Village Service Act. Several other statutes are repealed, and others are amended. The valuation and appeal provisions of the Assessment Act remain in force, and were not consolidated. The Municipal Government Act, often referred to simply as the MGA, was the end result of a lengthy consultative process extending over four years. The Municipal Legislation Review Committee produced a draft statute, excluding the planning provisions, and a separate review process led to a revised Planning Act. Both drafts were subject to extensive comment and a revised combined version was distributed for further comment. The new legislation has extensive support from municipalities. Tax Certificates Tax certificates are covered by Section 132 of the Municipal Government Act. The Section provides that tax certificates shall be issued on request. Former provisions requiring a vendor to provide the certificate have been deleted. This may affect conveyancing practice in those areas where the practice has been for the vendor to provide the certificate, or to at least pay for it. The new Section replaces Section 132 of the Assessment Act. The fee is that set by council by resolution. The statutory requirement that the fee be paid in advance has been deleted. It will now be a matter of municipal choice whether to provide - I -
- 2 - certificates before the fee is paid. Property practitioners will recall that some municipalities have refused to provide tax certificates as a result of a telephoned request because of the former wording that seemed to prevent the extension of credit. Tax certificates will have to show all sums due the municipality that form liens on the property. The MGA makes a considerable array of municipal charges liens. A review of those provisions would probably be quite illuminating. Partial Payment of Taxes Section 131 provides for the application of partial payments of taxes. The former provision was Section 130 of the Assessment Act. The statute now explicitly provides that where taxes are paid on behalf of a purchaser, the taxes are to be applied to the property designated by the payor but must also include any business occupancy tax owed by the owner with respect to that property: s.131(4). This provides some certainty for purchasers from persons who owe taxes on several properties and may be assessed for business occupancy with respect to several properties. The law formerly required the payment of all business occupancy taxes outstanding before any part of a payment could be applied to real property taxes. Redemption of Land Sold for Taxes The redemption period for land sold for taxes has been reduced to six months from one years: s.152(1). Tax sale procedures have been altered somewhat, mostly by providing municipalities with more choices as to how to proceed. Those interested can check Part VI of the MGA. Deed Transfer Tax The deed transfer tax is now covered by Part V of the Municipal Government Act. An affidavit of value continues to be required in all cases: s. 101. The form of the affidavit may be prescribed by the Minister, and it is anticipated that a uniform form for the affidavit will be prescribed shortly. An affidavit may (in the case of an older deed) state that it is not possible to determine the purchase price. This will be accepted where it is clear that the deed is not subject to the tax because it was executed before the tax came into effect: s. 10 1 (7).
- 3 - The rate of deed transfer tax may be set by the municipality at any level up to 1.5 % of the purchase price. The rate is set by by-law: s. \02. The tax is still a local option; the affidavit is mandatory throughout the Province. The deed transfer tax is payable by the grantee: s. 104. Exemptions have been altered somewhat: s. 109. The exemptions after April I, 1999, everywhere in Nova Scotia that the tax is levied, will be: between persons married to each other between persons that were married to each other if the transfer is for the purpose of a division of matrimonial assets gifts confirmatory deeds, deeds of rectification where there is no real consideration deeds from the Nova Scotia Farm Loan Board to the original borrower (that is, a reconveyance to the borrower on completion of the agreement is exempt from tax, which is the practice in most parts of the Province, but a conveyance to a third party purchaser is not exempt) tax sale deeds deeds signed before the tax came into effect deeds to carry out an agreement of sale entered into prior to the date the tax came into effect deeds to registered Canadian charities under some limitations Deeds between wholly owned subsidiaries or a subsidiary and its parent will no longer be exempt. The Act continues to provide for collection by the Registrar of Deeds where the municipality and the Minister agree. This practice is expanding. Title to Municipal Property Possession, occupation, use or obstruction of property of a municipality does not give an estate, right or title to the property: 50 (4). That is, it is not possible to get possessory title to municipal property. Where sufficient possession exists on April I, 1999 to give a possessory
- 4 - title, presumably that is valid since the Act does not say that it intends to interfere with vested rights. Possession, occupation, use or obstruction of a street, or of a part of a street, does not give and never has given any estate, right or title to the street: 308 (4). Even if sufficient possession has been attained to give possessory title to a street, title will not pass. The intention to interfere with vested rights (if any) is clear. A better way to look at this provision is that it is a restatement of the common law. The common law rule is "once a highway always a highway." The public cannot release rights once acquired by them, no authority can bind them in purporting to release such rights, and there is no extinctive presumption or prescription arising from non-exercise thereof.' Subsection 308 (4) is a close analogue of Section 17 of the Public Highways Act, R.S.N.S. 1989, c. 371. Note the broad defmition of "street" in Section 307. Streets Buildings encroaching on streets, or at least the street allowance, are a common conveyancing problem. The need to do something is clear, since the municipality as owner of the street and guardian of the public right of passage could require the removal of the obstruction at any time. One solution, probably the only reliable one, has been to go through the statutory process of closing the street and conveying the property in the closed portion to the owner of the offending building. This is an expensive process, although likely the survey has already been done. Equally, it is time consuming, especially where the street closing needs the approval of two Ministers. Halsbury'sLawso/England, third edition, v. 19, p. 87, citingdawesv. Hawkins (1860), 8 C.B.N.S. 848 [141 E.R. 1399); Turner v. Ringwood Highway Board (1870), L.R. 9 Eq. 418; Gerring v. Barfield (1864),11 L.T. 270; R. v. United Kingdom Electric Telegraph Co. (1862),31 L.J.M.C. 166; R. v. Platts (1880), 49 L.J.Q.B. 848; St. /ves Corpn. v. Wadswonh (1908),72 J.P. 73. See also Anger and Honsberger, Law o/real Propeny, second edition, v. 2, p. 1006. Rogers, Law o/canadian Municipal Corporations, s. 228.12, cites Canadian cases, some of which are: Stager v. Muskoka Lakes (1989), 71 O.R. (2d) 126 (Div. Ct.); Di Cenzo Const. Co. v. Glassco (1978), 21 O.R. (2d) 186, 90 D.L.R. (3d) 127 [in which the Ontario Court of Appeal recited the maxim and added: "the rights of the public can only be extinguishd by formal proceedings being taken for that purpose under statutory or other legal authority" (l34dlr»); Hackett v. Township o/colchester South, (1928) S.C.R. 255. See also Rogers, s. 230.1.
- 5 - Under Section 315 the process has been simplified. It is still necessary to have a public hearing, but the statutory time limits on the notices have been removed, eliminating a fruitful source of problems in the past. Non-lawyers have amazingly divergent views about how to count clear days. Street closings no longer require the approval of either the Minister of Transportation and Public Works or the Minister of Housing and Municipal Affairs. The Minister of Transportation and Public Works must be notified, since there is always a chance that the street belongs to the Province. Sale of land (s. 50) does not require the approval of the Minister of Housing and Municipal Affairs. The sale must, however, be for market value. The other common solution, preferable because it is cheaper even if it is not as reliable, is the equivalent of the letter of comfort from the Department of Transportation and Public Works. This letter essentially says that the Department has no immediate plans to tear down the building or to widen the travelled way in the area of the building. It makes no other promises. Some of the ones obtained from municipalities promise to let the building alone for as long as it lasts. The problem is that municipalities have not had authority to release the street, and estoppel does not operate to extinguish public rights. As noted above, in the absence of statutory authority, no authority can bind the public in purporting to release the public's right of passage over the entirety of the highway Section 314 allows the engineer (a municipal employee: s. 39) to grant permission for the continuation of an encroachment until such time as the encroaching building or structure is taken down or destroyed. This provision is the missing statutory authority to commit the municipality and to put some teeth into letters of comfort. The engineer in granting these permissions must follow the provisions of any by-law passed to regulate encroachments. This could include annual fees or rentals for significant encroachments, time limits and provisions respecting what encroachments can be endured and which have to be eliminated (for example, encroachments interfering with necessary sightlines at an intersection). It might be well to check the provisions of any applicable by-law before approaching the engineer. Subdivision Subdivision is covered by Part IX of the Municipal Government Act. Applicable definitions are found in Part VIII, Section 191, and in Section 3. Subdivision by will, where the will is executed after January I, 2000, is no longer permitted. Subdivision by will executed on or before January I, 2000 is permitted. That is, existing wills are not affected: s. 268 (2) (j). A codicil executed after January I, 2000 that attempts to divide or redivide land will be ineffective. Where a deed creates a subdivision (including a consolidation) that would be exempt from subdivision approval, the deed should include an affidavit setting out the exemption and the facts
- 6 - that bring the subdivision within the exemption. That is then sufficient proof that the subdivision did not require approval unless the grantee has notice to the contrary: s. 268 (3). Subdivision by instrument is still permitted: s. 269. Infrastructure charges may be a charge on the land; any agreement to postpone them must be registered. Seeing that the agreement is properly released with respect to any particular lot may be complicated: ss. 274, 275, 276. Lot Consolidations Section 282( 1): a consolidation cannot be approved unless the necessary deed(s) to carry the consolidation into effect, plus recording fees, are provided to the development officer. Recording fees are additional to normal costs of subdivision. Note that requisite deed transfer tax affidavits and taxes if applicable will also have to be provided. Section 282(2) on approval, the deeds will be recorded at the same time as the approved plan or instrument; see also s. 269(4) and (5), consolidation by instrument, which is subject to the same rules. Where a consolidation involves a sale, the lawyers for the parties may prefer not to provide the deeds until it is clear that the consolidation will be approved and funds can be transferred. Section 285(5) an approval of a consolidation must be indexed in the registry as a conveyance from both the person whose land is divided aru1 for the person whose land is enlarged. In order to permit the recording of the deeds it will also be necessary to comply with the deed transfer tax provisions and furnish the development officer with executed affidavits of value and, if necessary, the required tax payment. Section 285 has been made necessary by a common failing to record deeds necessary to create the consolidated lot under one ownership, resulting in later title problems for both parcels and frequently attempts to rescind the original permission for the consolidation. Other changes in subdivision and consolidation may result from new regulations.
- 7 - Planning Those who practice in the area of planning and development will refer to the text of the statute and various explanatory pieces being distributed by the Department of Housing and Municipal Affairs. The real estate practitioner should know of the existence of a new planning tool, the site plan approval. Essentially, this is a sort of mini development agreement. Sections 231 to 234. Continuity Existing municipal planning strategies, land-use by-laws and subdivision by-laws and regulations, as well as all other municipal by-laws, including those establishing deed transfer tax rates, are continued in force: s. 538.