Introduction
Recall from Part 1 that servitudes are non-financial charges that create and bestow rights and interests over a property to someone other than the property owner. These interests may affect a property owner’s ability to deal with the property in a manner of his choosing and, consequently, may be important when determining fair market value (FMV) of the property.
Note to property buyers: as part of a ‘standard conveyance’ of property, your Notary will obtain undertakings from the seller’s legal representative to remove all financial charges (mortgages, liens, CPLs, judgments, etc.) from the property title. However, servitudes, being primarily non-financial in nature, will “run with the land” and remain on the property title even as ownership changes. Ergo, the buyer takes ownership of the property and registered servitudes. Thus, a prudent buyer should conduct due diligence and obtain copies of the registered servitudes either prior to making an offer to purchase or, at the very latest, prior to removing real estate subjects.
Part 2 – Covenants & Building Schemes
This section of the article addresses the distinct features and functionality of land use restrictive agreements: restrictive covenants & building schemes.
Covenants
A restrictive covenant imposes a restriction against uses of property (by its owner, the covenantor) for the purpose of benefiting a different property(’s owner, the covenantee). Restrictions must be negative, meaning that the covenantor cannot be forced to do something, but rather, is compelled not to do something. Thus, making compliance possible by doing nothing.
For example, there are 3 properties on a hillside. The bottom properties have restrictive covenants on their land, prohibiting them from planting trees that grow beyond a certain height or from building dwelling homes beyond 2 storeys high, so that the top property (owners) may benefit from an unimpeded view. In a separate example with the same hillside properties, the top property contains a restrictive covenant preventing the owner from installing a pool, thereby benefitting the bottom 2 properties because the pool installation could cause a landslide.
There is one notable exception to the negative restriction and benefiting property rules pertaining to covenants. If any of the Crown, a government agency, a municipality, or regional district holds the covenant, then the covenant may be negative or positive in nature and does not need to benefit another property. For example, a restrictive covenant could be imposed to prevent the building of a youth shelter or a hospice on a certain property. In another example, a covenant could prevent a property owner from demolishing a heritage building and could require the property owner to restore and maintain the building to meet certain criteria.
Regardless of type, a covenant must be registered at the Land Title Office and may last for an unlimited or specified duration.
Part 3 – Servitudes: The Rare and Unusual
This section of the article provides preliminary information about less common types of servitudes: rent charges, party wall agreements and profits à prendre.
A rent charge attaches a financial obligation (requirement to pay) to the dominant tenement’s property rights. For example, at certain private ski or golf resorts, a rent charge may be registered to ensure that the properties being serviced will pay the recurring cost of the utilities to the resort. Note: despite the financial nature, rent charges are not removed from property title upon transfer of ownership and are handled differently than other financial charges (mortgages, liens, CPLs, judgments).
A party wall agreement pertains to two separate buildings on adjacent properties, which share a common wall. This design is limited (but may occur, for example, in non-strata row homes), so the need for party wall agreements is as rare as its characteristics are unique. This is one of the only servitudes that allows for positive covenants (to pay money to repair and maintain the wall) where the Crown is not one of the parties to the agreement.
Quite literally, a profit à prendre is a “right of profit.” It entitles the holder to remove products – such as timber, crops, turf, soil, grass, animals, oil, natural gas – from property belonging to another owner. Like an easement, a profit à prendre can grant rights exclusively to one person or to more than one person, can be finite or infinite in duration, and can “run with the land” when registered at the Land Title Office. However, a profit à prendre is distinguished by its removal rights (as opposed to mere access) and by the fact that the rights are tied to benefiting person(s) and not to a dominant tenement.
Summary
- A restrictive covenant imposes a negative restriction upon one property for the benefit of another property owner.
- Crown covenants may be negative or positive and need not be created to benefit another property.
- A building scheme is created when a negative covenant is imposed over 2+ properties for the benefit of those properties.
- Covenants must be registered at the Land Title Office and may last for an unlimited or specified duration.
- Rent charges and party wall agreements are much less common than covenants and easements. They are not completely “non-financial” in nature; rather, a rent charge and a party wall agreement are distinguishable because, despite the financial nature, they are not removed from property title upon transfer of ownership. Thus, by “running with the land,” party wall agreements and rent charges pass the financial obligation from the seller to the new property owner.
- Profits à prendre are also unusual and rare, conferring removal rights, rather than access rights.
