Aboriginal Land Development and Sale (Continued) #330

Dec 01, 2000

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By Gerry Neely
B.A. LL.B.

The importance of a homeowner's association was alluded to in Legally Speaking column 329. The association's role in a development is equivalent to that of a strata corporation. It provides the mechanism through which the owners of leasehold interests in a development, or a phase of a development, govern the administration of their properties. An example of this is the control of parking spaces and storage lockers, which are tied to the subleases.

The sale of Aboriginal lands creates new problems for both licensees and conveyancers - one of which arises from the fact, as noted in column 329, that registration in the Indian Land Registry takes several days. Normally, no funds will be advanced to either the buyer or lender until registration is complete. Licensees are the first to face this problem when they are fixing the dates for completion, adjustment and possession. This problem is intensified when the licensee is dealing with back-to-back transactions.

Conveyancers have developed several procedures to deal with this delay in registration. Where a lender is involved, the mortgage monies are advanced to the lender's lawyer when the borrower has satisfied all of the lender's requirements, except for registration. The sale closes upon the undertaking of the lender's lawyer to pay the mortgage monies to the buyer's conveyancer upon proof of satisfactory registration.

Another procedure involves the execution and delivery of the sublease and supporting documents to the Indian Land Registry a few days in advance of closing in the hope that they will be registered by the completion date.

The buyer signs an additional document - a reassignment back to the seller. This is held in escrow to be registered if the sale does not complete. If a mortgage were involved, the buyer's conveyancer would have to undertake not to draw down the mortgage monies and apply to obtain a discharge of the mortgage if it had been registered.

In concluding this overview of the sale of Aboriginal lands, there are two points I wish to emphasize. The first is that all of this discussion relates to reserve lands and not to off-reserve lands to which Aboriginals claim title.

The second is the importance of reading all the documents affecting a prospective buyer's interest in a subleased property. They may include the headlease, sublease, service agreements with municipalities, the application of municipal bylaws and a band's property tax bylaw. The Musqueam Indian Band's rent review clause of the rent payable over the term of a 99-year lease is the most recent example of the need to make your clients aware of the responsibilities they assume.

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