BC Real Estate SUBDIVISION OF LAND & TITLE REGISTRATION IN B.C HOW IS LAND DIVIDED?

- 1 - BC Real Estate SUBDIVISION OF LAND & TITLE REGISTRATION IN B.C HOW IS LAND DIVIDED? Subdivision of Lands Def: division of land into to 2 or more parcels BC land can only be subdivided in compliance with Land Title Act Subdivision must be in the public's interest to subdivide Strata Concept Allows subdivision of bldgs into separate parts for individual ownership plus ownership interest in common areas Part of the property an owner owns is called a "strata lot" & is registered in Land Title Office Strata owner owns a strata lot plus their proportionate share of the common property. Subdividing a Building Strata lots are created out of the building - NOT the land Land is secondary to primary purpose of dividing the building into privately owned lots Land becomes the common area Each strata lot is equivalent to a separate parcel of land Conversions Occurs when developer subdivides an existing building into strata lots Developer must get approval from local municipal government If developer wants to convert a building where there are tenants, Residential Tenancy Act applies Bare Land Strata Developments Land without a building Stratification of land defining characteristic Air Space Developments Commonly used by developers who want separate ownership of residential & commercial components Commercial portion usually the air space parcel Advantage is residential & commercial strata lots are in different strata corporations with separate bylaws, rules and expenses Mixed Use Strata Developments Strata development that share two or more types of uses, eg: residential lots with stores or office No airspace has been filed to create separate properties Real Estate Boot Camp.ca go4success@gmail.com Ch. 4

3 Strata Principles 1. "A strata is a strata" - that is legal fundamentals the same for all types of stratas 2. No strata police - every strata development is "self-enforcing". Owners can force strata council to abide by the Strata Property Act by suing strata council 3. "Not on reserves" - Indian land comes under federal jurisdiction so Strata Property Act does not apply unless a treaty is made with province of BC **Real estate development on treaty land is not ownership but long term leases. HOW A STRATA DEVELOPMENT IS CREATED Developer files his "Strata Plan" in the Land Title s Office and designates which parts of a strata project are strata lots and which are common property. TYPES OF STRATA PROPERTY Developer needs municipal government approval & strata plan must include: Registration number Boundaries of the land Location of any buildings Drawing distinguishing strata lots from one another Each strata lot in square meters Schedule of Unit entitlement Schedule of voting rights Bylaws Deed document under seal Conveyancing - buying and selling of Real Estate 1. Strata Lots -Upon purchase or lease developer must state if the units will be fee simple or leases 2. Freehold - If developer is the owner & subdivides land, land sells as fee simple title to buyers 3. Leasehold - is a charge If developer leases land for strata development, may only lease from province, municipality Lease must be for at least 50 years Government is leasehold landlord - developer is long term tenant Developer leases land under a document called a "ground lease" HISTORICALLY ENGLISH COMMON LAW HAS ALWAYS GOVERNED TITLE TO LAND IN CANADA COMMON LAW Common Law Deed System (originated in Great Britain) Owners established Common Law title to land by producing all relevant documents and establishing a chain of title to the land from previous owners. Under Common Law if there is a new owner, original owner can get their land back if they can prove a VOID DEED. Previous owners had 20 years to prove a VOID DEED thus, new owner would not feel safe for 20 years. Real Estate Boot Camp.ca go4success@gmail.com Ch. 4 2

Doctrine of the Void Deed Where a break in the title occurs (eg: property sold), all transactions after the break are void. Thus, even though purchaser was innocent and paid fair market value, if a void deed can be proved the original owners get the property back. Escheat is transfer of title of property/estate to the state when an individual dies without a will and legal heirs. 3 ways to prove a Void deed under Common Law Forged deed Given in exchange for an illegal act NOn est Factum Doesn t know what he signed Void Deed is an inadequate way to protect innocent buyer. Void Deed has been the RATIONALE and basis for the B.C. Land Registration System. B.C. Land Registration System uses the Torrens System.. TORRENS SYSTEM (Recording System + Guarantee) (BC has a modified Torrens system created by statute) Under Torrens System - all title to land in BC must be registered. All Land has to be registered in the Lands Title's district office BC has 5 districts. Register of Title must contain: Name of Fee simple owner (registered owner) on each individual parcel of land Nature of the interest, eg. Strata unit, commercial Description of the property. Objective: Guarantees fee simple title & removes the need for new owners to look for old documents as to the legal ownership of the property. GOVERNMENT GUARANTEES TITLE TO: An innocent purchaser Who pays fair market value Purchased property from the fee simple owner. Real Estate Boot Camp.ca go4success@gmail.com Ch. 4 3

VOID DEED Common Law If a property is sold, previous owners have 20 years to prove property sale was not legal. There are 3 ways to prove deed is void 1. Fraud 2. Illegal Act 3. Non es Factum. TORRENS SYSTEM Statute Law Indefeasibility Gov. guarantees ownership. Even if fraud occurs New purchaser can keep the property. & original owner loses property. Exception: Fee simple obtained by fraud by the registered owner Prove a void deed & get property back. Original homeowners now homeless. Assurance Fund - $ available for homeowners who cannot get property back because Torrens System changed the rules. Void Deed & Torrens System are not the same Four PRINCIPLES of the TORRENS SYSTEM 1) Indefeasibility 2) Effect of registration 3) Abolition of notice 4) Assurance principle Bona Fide: Characterized by good faith and lack of fraud or deceit. 1. INDEFEASIBILITY PRINCIPLE reverses doctrine of the Void Deed Guarantees person on fee simple title is the owner. Conclusive evidence to 3 rd party who the owner is. Person s name on title cannot be defeated or voided. No need to discover how owner got his name on fee simple title Fee simple Guaranteed Fee Simple Joe Blow Charges 2002 Mortgage 2008 Lien 2017 Mortgage Charges NOT guaranteed Real Estate Boot Camp.ca go4success@gmail.com Ch. 4 4

A person dealing in good faith with the registered owner of a property IS NOT required to investigate how the owner got on title. If a dishonest person manages to get their name on title, the property is theirs unless owner can prove otherwise. Often the dishonest person will quickly sell/flip the property,. T he BUYER prevails over rightful property owner if all 3 below are met: 1) bonafied buyer ie: good faith buyer, innocent 2) bought at fair market price 3) buying from registered owner Torrens system allows Innocent new purchasers can keep the property even if it is proven there was fraud. Property Flipper If the original owner can prove s/he has been defrauded of fee simple ownership, it is possible they could get their property back before it is sold; usually by placing a caveat against the property to hinder all dealings on the property until there is an investigation. Fee Simple Caveat Robert Dexter - Notice placed on title claiming an interest in land. CERTIFICATE OF PENDING LITIGATION (CPL) Notice that court action is pending, but no decision has been reached. Hinders all dealings with that property - subject to CPL outcome CPL must be for an interest in land, eg: unpaid mortgage, fraud, etc. Caveat lapses after 2 months once registered on title "Pending" litigation means an investigation is going on -- not that legal action has begun BUT if the property has been sold by the registered owner & (flipped) to an innocent 3 rd party for fair market value, the original owner will need to go to court and seek compensation ($) from the Assurance Fund while the new owner is entitled to keep the property. Thus, it is in the best interest of the property thief to re-sell the property quickly. EXCEPTIONS to indefeasibility principle: Forest Act with restrictive covenant on title Unpaid fed/prov. taxes or assessments Right of way/ Highways, easements Reservations in original Crown grant Municipal charges Caveats, builders liens, etc. Where a tenant has lived for 3 years or less Rights of Expropriation, escheat Fee simple (NOT mortgages) obtained by fraud/forgery by the registered owner. Caveat - Certificate of Pending Litigation Incorrect boundaries Real Estate Boot Camp.ca go4success@gmail.com Ch. 4 5

2. EFFECT OF REGISTRATION PRINCIPLE Cannot transfer any interest in land until it is registered. Legal title does not pass to another until registration is made at Land Titles office. 3. ABOLITION OF NOTICE PRINCIPLE Abolished by Sec. 29 Land Titles Act FEE SIMPLE Charges: Mortgage Liens Easement 4. ASSURANCE PRINCIPLE NO SURPRISES. The buyer needs only to be concerned with what has been disclosed on the deed. Exception: Does not apply if owner participated in fraud. Abolished because conflicts with Torren's principle of conclusiveness of the registrar The new Torrens system means some people will lose their property where they would not have under the Doctrine of the Void Deed Homeowners who have been defrauded of their property &cannot get it back because it was sold to an innocent 3 rd party, can seek financial compensation from the government s ASSURANCE FUND. To Collect from the Assurance Fund Must Prove: 1. Lost an interest in land 2. Cannot recover or be compensated by court action 3. It is the fault of the new BC Land Registration system The assurance fund was established to be used as a last resort. BC LAND REGISTRATION SYSTEM VS PURE TORRENS SYSTEM BC has a modified Torrens system due to the "notation of trust. In BC it is possible for a property to be filed in the Land Titles Office without the name of the lawful owner on title, for example, infants or heirs, corporations, etc. Fee Simple (in trust) Trusts a notation made on title and filed in the Land Title s office indicating the land is being held in Real Estate Boot Camp.ca trust. The name of the real go4success@gmail.com owner(s) does not appear. Ch. 4 6

Forms of Documents BC Real Estate Trading Services Act requires certain forms be used for most transactions and the forms are available for licensees at the real estate brokerage s office. COMMON ITEMS APPEARING ON TITLE Duplicate Certificate - Notice on title stating title is being held as collateral & no changes to title can take place, eg: sell, place new mortgage, etc. Caveat - Notice placed on title claiming an interest in land. Certificate of Pending Litigation - Notice that court action is pending, but no decision has been reached. Builder's Lien - Claim for payment by contractor, supplier or individual Judgment Court will issue a decision to resolve the issue(s) such as: garnishee against wages force a judicial sale judgment against land Section 29 Covenant - Where govenment(s) may restrict the use of land. Usually due to contamination of land, but also allows municipalities to control what can be built on the land. Notice of Special Waste - Where a Waste Management director files on title the type of contamination & estimated period of contamination Heritage Designation - Property designated as a heritage site under Heritage Conservation Act or local govenment. Once registered, prohibits demolition, relocation or alteration of interior and exterior of building. TITLE INSURANCE Defence against title/property theft Insurer s duty to defend owner s property New in Canada Lenders will sometimes accept Title Insurance in place of doing a property assessment. REGISTRATION Almost all land title office documents registered on line electronically Lawyer will do online title search If property is in same condition as expected, lawyer will attach their electron signature & files documents. Real Estate Boot Camp.ca go4success@gmail.com Ch. 4 7

FIRST NATIONS LAND REGISTRATION 1. Indian Land Registry System (ILRS) Documents related to reserve land. Administered by Indian Act 2. First Nations Land Registry System (FNLRS) Used for land records of First Nations who use their own land code 3. Self Governing First Nations Land Registry (SGFNLR) Has limited use in BC None of the above operate under the Torrens System. Consent procedures for most transaction MANUFACTURED HOMES (trailer is just a chattel, but licensees involved if land is involved). Purpose of the Manufactured Home Act is to set up a registration system similar to real property registration. This is a registration system - not a Torrens System Major difference is there is no title to a manufactured home - just registered ownership. Differs from Torrens System because: 1. Charges DO take priority 2. No indefeasibility & no insurance fund. Similarities to Torrens System: Registrar registers interest claimed. Failure to register has same effect as Land Titles Act - 3rd parties not affected by an unregistered transfer that is, new ownership not recognized unless registered. Cannot sell manufactured home unless it is registered and the transfer is registered. Registration: is effective on the date a home registration number has been assigned by the registry in Victoria. DECALS - At time of registration owner gets a home registration number and 2 DECALS with the home number. Decal must be placed on manufactured home ASAP. Decals are good for a lifetime. When ownership is transferred, the new home owner's interest in the home will remain under the original registration home number. NO NEED TO EVER RE-REGISTER DECAL. To move a manufactured home down a highway Manufactured home must be registered, have a transfer permit taxes paid (good for 30 days). Real Estate Boot Camp.ca go4success@gmail.com Ch. 4 8

WHO OWNS THE LAND? Five categories of land ownership in BC 1. Fed & Provincial Crown Lands 2. Indian Reserves 3. Privately Owned Lands 4. Treaty Settlement Lands 5. Aboriginal Title 1. Provincial Crown Land 94% of land in BC is owned and administered by gov. agencies Def: Crown Land - Any interest in land above or below water that is vested in the government Crown may grant land or interest in land to individuals, corporations or municipal governments 1% of land in BC Includes Indian reserves, national parks, national defense areas & federal harbors 2. Indian Reserves - Indian Act First Nations people have the collective right to benefit from land allocated to them. Not subject to Land Title Act & generally not subdivided 3. Private Lands Land sold or granted as fee simple to individuals, corporations and local governments Fee simple is the highest estate in Canadian law and is akin to absolute ownership Private land amounts to 5% of the total land in BC 4. Treaty Settlement Land 0.2% of land in BC Treaty agreements with aboriginal groups were seldom negotiated in BC in early European settlement Therefore, BC is involved in ongoing, modern treaty-negotiations Purpose of negotiations is to promote agreement as to land distribution in BC Often includes transfer of Crown land in fee simple to Aboriginal groups Unlike reserve lands, Aboriginal groups are permitted to exercise government authority over their land 5. Aboriginal Title Canadian courts have recognized that Aboriginal groups occupied vast portions of Canada before Europeans settlement and native claims remain unless extinguished by treaty Real Estate Boot Camp.ca go4success@gmail.com Ch. 4 9