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Professional Standards Manual

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3. Acting For Buyers

(n) Items Affecting a Property

(i) Issues Affecting an Owner’s Interests

Many types of rights in favour of governmental and other agencies may affect a given piece of property. The following are some of the most common issues that arise. Licensees are expected to be familiar with these issues where they are common in the market area or segment in which they practice.

(1) Dedications, Restrictions and Expropriations

Not included on most title searches or plans are the Ministry of Transportation’s ‘‘takings’’ as a result of expropriation or dedication. Sizes of parcels indicated on B.C. Assessment records may not reflect the net size. Rights-of-way for passage or road widening may not have been surveyed or registered. Driveways and culverts may not be constructed on any public roads without the permission of the Ministry of Transportation. Permission could also be denied on limited-access roads. On cliffs and adjacent to bodies of water (including streams, rivers, oceans or lakes), there may be building setback requirements or other restrictions to preserve the water or uplands habitat. One hundred-year flood plains, requiring minimum elevations of main floors, may be far removed from the relevant body of water. See your local Highways Department or local government office for information.

(2) Air Space Rights and Railway Lines

The Aeronautics Act limits construction and controls heights of structures in a wide arc around all airports. Properties with railway lines passing through pose a real challenge to the developer as no less than four agencies become involved for the approval of drainage, subterranean crossing of service lines, and level crossings.

(3) Agricultural Land Reserve (ALR)

The Agricultural Land Reserve, in addition to limiting development, may also take precedence over municipal zoning.

(4) Islands Trust

Those Gulf Islands that come under the jurisdiction of the Islands Trust must adhere to the development and land use approved by that body. Foreshore leases for oysters, water lots for fish farms and log booming grounds may not be indicated on the title but will certainly impact on the view or use of the waterfront landowner.

(5) Heritage Conservation Act

While the intent of the Heritage Conservation Act with respect to archaeological sites is to balance a respect for heritage and a property owner’s right to develop, some private landowners may face costly archaeological studies and/or limited use of their land.

The Heritage Conservation Act is concerned with activities that may alter heritage sites automatically protected under the legislation. While it is not likely to affect properties where there is no intended change of use, it could have an impact where a change in that use is contemplated (e.g., subdivision, new construction, construction of an addition or pool).

If the intent of a property owner or potential buyer is to subdivide the property, then, as part of the process of subdivision, the proposal may be referred by the local municipality or regional district to the Archaeology Branch (of the Ministry of Tourism, Culture and the Arts) to determine if an archaeological assessment is recommended. The cost of such an assessment would be borne by the property owner and can be substantial.

Further, the Local Government Act gives municipalities and regional districts the power to pass bylaws to withhold the issuance of building permits if they would result in an alteration to protected heritage property.

Licensees should be aware that archaeological sites are not at this time commonly noted on the title of affected properties. However, the statute applies regardless of whether or not the notice is registered on title.

What significance does this have for licensees? Based on court decisions in similar situations, it is likely that a court would find a licensee has a duty to know whether there are archaeologically sensitive areas in the community in which they work and, if so, whether a search for archaeological sites may provide necessary information for a seller or a buyer.

The first potential source of that information is the local municipality or regional district. However, not all municipalities and regional districts maintain up-to-date information respecting archaeological sites. The second source is the Archaeology Branch. Its website (www.for.gov.bc.ca/archaeology/index.htm) contains a broad range of information on the Heritage Conservation Act and its application, including a Data Request Form for requesting information about specific sites. Most requests for information about a specific site can be answered within four to five days. More detailed enquiries may require up to two weeks.

Licensees can also request from the Archaeology Branch a copy of a map that identifies registered sites in a specific region of the province. These sites are more likely to be clustered around existing urban areas, major rivers or other waterways, and other areas that are most attractive for human habitation.

A prudent licensee working with a buyer who becomes interested in a particular property will want to determine if the proposed use or redevelopment of that property will result in ground alteration that might be affected by Heritage Conservation Act. If the buyer does intend to alter the use, the following clause should be incorporated into the Contract of Purchase and Sale:

Heritage Conservation Act Clause

Subject to the Buyer satisfying himself/herself on or before(date) regarding the potential effect of the Heritage Conservation Act on the use and/or development of the property.

This condition is for the sole benefit of the Buyer.

Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

The Archaeology Branch may be contacted as follows:

Ministry of Tourism, Culture and the Arts Archaeology Branch

PO Box 9375, Stn. Prov. Govt.

Victoria, B.C. V8W 9M5

Tel: 250-952-5021

Fax: 250-952-4188

Website: www.for.gov.bc.ca/archaeology/index.htm

(6) Fish Protection Act — Riparian Areas Regulation

[12/18/2012 The following section was amended with updated information]

The Riparian Areas Regulation under the Fish Protection Act is intended to protect riparian fish habitat, while facilitating urban development that exhibits high standards of environmental stewardship.

A licensee acting for a buyer or seller in a transaction that involves a “stream” (as defined below) on the subject property or neighboring property should be aware that the Riparian Areas Regulation (RAR) could have a significant effect on the value and potential use or development of the property because of legislated building/development setbacks and other requirements protecting riparian areas, including riparian vegetation and fish habitat.

A “stream” in the province of BC is broadly defined in the RAR to include the following that provides fish habitat:

  • (a) a watercourse, whether it usually contains water or not;
  • (b) a pond, lake, river, creek or brook;
  • (c) a ditch, spring or wetland that is connected by surface flow to something referred to in paragraph (a) or (b);

Riparian vegetation and streams are protected by the Federal Fisheries Act; the Provincial Fish Protection Act, and the Water Act. Municipal bylaws may also apply.

While licensees are not expected to be experts in the Riparian Areas Regulation, they are expected to be alert to the implications of RAR and are obliged to advise clients who are buying, selling or developing property that is impacted by the legislation to seek independent professional advice.

In instances where a “stream”, as defined above is present, licensees drafting contracts of purchase and sale should incorporate the following clause:

Fish Protection Act Clause

Subject to the Buyer receiving and approving independent professional advice concerning any limitations on the use and/or development of the property resulting from the Fish Protection Act, on or before (date) .

This condition is for the sole benefit of the Buyer.

Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

If the RAR applies to a property, the local government will require the riparian area and development to first be assessed by a Qualified Environmental Professional (QEP) such as a Registered Professional Biologist (R.P.Bio.) to determine a Streamside Protection and Enhancement Area (SPEA), which is defined as a setback that protects degradation of fish habitat. The SPEA is delineated by a QEP as part of RAR to protect fish habitat from land alteration including consideration of sediment and erosion control; damage or alteration of vegetation, and trails and landscaping.

For a list of regional districts and municipalities where the RAR applies visit:

www.env.gov.bc.ca/habitat/fish_protection_act/riparian/documents/applicable_regulations_table.pdf

For more information about riparian areas visit:

www.env.gov.bc.ca/habitat/fish_protection_act/riparian/riparian_areas.html

www.livingbywater.ca

www.stewardshipcentre.bc.ca

(7) Ground Water Protection Regulation

On November 1, 2005, the Ground Water Protection Regulation took effect. The Regulation is intended to protect groundwater and wells from contamination. The Regulation imposes duties on well drillers and pump installers as well as owners of land containing a well.

The property owner must:

  • maintain the integrity of the wellhead and surface seal;
  • engage a qualified well driller if alterations to, or closure of, the well are contemplated;
  • ensure the well identification plate remains visible and not damaged or lost;
  • deactivate or permanently close a well that has been out of service; and
  • ensure the well is securely capped or covered.

Licensees should advise buyers that the Regulation will impose obligations on them if they purchase the property containing the well. Additionally, buyers should determine the extent that the seller has complied with the Regulation.

Additional information on the Ground Water Protection Regulation can be obtained from the BC Laws website at www.bclaws.ca.

(8) The Effect on Property Taxes of Harvesting Timber

Where private land is classified for property tax purposes such as forest land, and has as its highest and best use the production and harvesting of timber, B.C. Assessment values the land using a two-step process. First, they assess bare land value based on factors such as soil quality, accessibility, parcel size and location. Secondly, after timber has been harvested, BC Assessment adds the assessed value of the cut timber to the bare land value of the land. 

BC Assessment provides the following example of this two-step assessment process:

For example, timber harvested in the calendar year 2015 will show up as added value on the assessment notice of a forest land property for the 2017 Assessment Roll. For property taxes payable in the summer of 2017, part of the value may come from the harvesting of trees two years previously.

Prospective purchasers of property classed as forest land are advised to enquire about previous harvesting on the property, and its possible property tax implications.

For more information, see:

How Managed Forest Land is Assessed 

Managed Forest Land: A Warning to Potential Purchasers 

(9) First Nations Lands

The Superintendent of Real Estate has advised that in his view RESA applies to the real estate services provided in respect of First Nations land located in British Columbia. Thus, the licensing and other requirements of RESA would be applicable.

In the Superintendent’s view, the Real Estate Development Marketing Act would generally not apply to development properties located on First Nations land in British Columbia. However, depending on the specific terms of any land settlement agreement, such as the Nisga’a Agreement, it is possible for First Nations land to be governed by the Real Estate Development Marketing Act. A licensee acting in respect of development property located on First Nations land may wish to obtain legal advice in any situation where it is not clear whether the Real Estate Development Marketing Act would be applicable.

Licensees should advise consumers that the Real Estate Development Marketing Act does not apply and that the purchasers are not entitled to a disclosure statement, rescission rights or other benefits of the Real Estate Development Marketing Act.

Although the Strata Property Act generally does not apply to developments on First Nations land, depending on the specific terms of any land settlement agreement, such as the Nisga’a Agreement, it is possible for a strata development on First Nations land to be governed by the Strata Property Act.

Other problems of a less visible nature, but just as serious for the buyer, include First Nations lands issues which are frequently associated with land claims or significant aboriginal archaeological sites (see index under Heritage Conservation Act). However, in areas where native bands have developed land for supply to non-natives on a leasehold basis, extra caution must be taken by the licensee acting on behalf of either the buyer or seller of the improvements on that land.

Traditional remedies for contractual disputes may not be available as provincial courts or appeal panels may have no jurisdiction.

(10) Invasive Species

Many local governments have enacted bylaws pertaining to noxious weeds or invasive plants. These bylaws specifically require property owners to ensure that certain listed species are not growing on their property, or are controlled from spreading from their property.

The Invasive Species Council of British Columbia has developed the Invasive Species Toolkit for Local Government: Information for Local Government, Developers and Real Estate Professionals, which includes information on:

  • Recommendations and tools available to developers and real estate professionals regarding invasive species on private lands;
  • Local government jurisdiction and enabling legislation for local invasive species control programs;
  • Determining responsibility and management of private property impacted by invasive species, and
  • Key resources and reporting tools available on invasive species in BC.

More Information:

Invasive Species Council of BC:  http://bcinvasives.ca/

Invasive Species Toolkit for Local Government: Information for Local Government, Developers and Real Estate Professionals:  http://bcinvasives.ca/documents/Govt_Toolkit_Final_WEB_09_10_2014.pdf

(11) Leasehold Interests

Leasehold interests may include rental of real property of any description, strata title properties on leasehold land (prepaid or ongoing), co-operatives on leasehold land (rental leases), manufactured home pads in manufactured home parks, water lot leases for floating homes or moorages, etc. This is a complex area where the public should be urged to obtain legal advice.

Terms, renewal procedures, rate reviews, and assignability are elements of the lease which must be reviewed by the buyer with advice from a lawyer competent in leases. The licensee should not assume all leases from a common lessor are identical. The licensee should search the title and obtain a copy of the head lease in every case. He or she should become acquainted with the provision of services such as water, sewer, garbage, and snow removal. Are they provided by the landlord or contracted to third parties? How are property taxes collected? The licensee should insist that buyers make their own enquiries at the local city or municipal hall or at the band administration offices, if applicable, and provide adequate time within the Contract of Purchase and Sale for these enquiries to take place.

A case that clearly illustrated the duties of buyers’ agents to their clients is the case of Rieger v. Croft & Finlay 69

B.C.L.R. (2d) 288. In 1983, Ms. Rieger purchased a unit in a housing cooperative on leased land. The purchaser was not informed that the head lease provided for a rent revision every 22 years. A rent revision occurred in 1990. The purchaser sued various parties, including the selling agent and the conveyancing solicitors. The judge found the selling agent and the conveyancing solicitors negligent. The judge found the selling agent’s negligence warranted a higher proportion of fault and apportioned the fault 60/40 between the selling agent and the solicitors.

With respect to the selling agent’s duty, the judge stated that the selling agent owed a duty to the purchaser to know the product he was selling. The judge found that the selling agent knew the land was leased and ought to have found out whether the lease was constant, prepaid, or variable, and how long the lease term was. The judge held that alternatively, the selling agent should have made the transfer subject to a solicitor’s review of the lease or title documents. The judge found the selling agent failed in his duty and was therefore liable to the purchaser.

The judge commented that the agents for the seller did not owe a duty to the purchaser. Although they did not know of the rent revision, the judge found that nothing that the agents for the seller did was misleading. The judge also rejected the argument that the rent revision clause was a ‘‘defect’’ in title and was required to be disclosed by the agents for the seller.

(ii) Title Insurance

Although fairly common in the United States, title insurance is a relatively new consideration for real estate transactions in British Columbia. This is likely because B.C.’s Land Title registration system is regarded as being one of the most definitive in North America. With only a few exceptions, the B.C. Land Title registration system guarantees the title to a property.

Title insurance offers coverage for lenders or buyers against a loss as a result of acquiring a property, or an interest in a property, with a defective title. A defect could be characterized as the existence of an interest in a particular property that was unknown at the time of the transaction. In essence, title insurance covers against losses sustained due to the condition of the title being other than as registered with the Land Title Office.

While title insurance is most often used by commercial real estate lenders and purchasers, there may also be certain situations where it could be useful to a buyer of a residential property, particularly as the scope of insurance coverage expands. In addition, some lending institutions may require title insurance as a condition of approving a mortgage loan secured by residential property.

Licensees wishing to learn more about title insurance and its application to residential and commercial transactions are encouraged to refer to the B.C. Real Estate Association’s three-part Legally Speaking series (Articles 321, 322 and 323) that deals with this topic. Past issues of Legally Speaking are available on the Association’s page on the REALTORLink™ website.

(iii) Floating Homes

If a floating home or houseboat includes an interest in land (e.g., as part of a strata lot) or is sold in conjunction with a strata lot (water lot), it qualifies as real estate and can be advertised and sold as such. Without an interest in land, it remains simply a ‘‘boat’’, that is, a chattel and can only be advertised and sold as such.

(iv) Farm Land Classification

Licensees must keep in mind that, for those clients who are purchasing land classified as farm land for property tax purposes, specific requirements must be met for that property to continue to qualify for farm classification. Those requirements are set out in the Assessment Act.

The regulation requires a specified amount of ‘‘primary agricultural products’’ to be produced and sold by October 31 to qualify the land for farm class in the following year.

The regulation also requires the completion of an application form by October 31 for any new farm to enable farm class to be granted the next tax year. The assessor may require new owners of existing farms to file an application for farm class. Also, at any time during the year, the assessor may require the provision of farm income details or other information to support the continuation of farm class.

If requirements are not met, the assessor is required to deny or remove farm classification for the following year. Typically, this means the land will change to Class 1 (residential) or Class 6 (business and other). These classes typically have higher tax rates and higher land values than farm land. Land classified as farm is valued by rates set by the assessment commissioner, reflecting only the value of the land in farm use, not necessarily highest and best use.

Further information on farm assessment can be obtained from the B.C. Assessment website at www.bcassessment.bc.ca, through a local assessor, or by contacting the farm appraiser in Cost and Legislated Assessment Services, B.C. Assessment head office at 250-595-6211.