Restrictive Covenants – Cancellation or Modification #76
CATEGORY: Legally Speaking
TAGS: Construction Developer Land Title Property Law Act Restrictive Covenant Rural Real Estate Subdivision Plan
By Gerry Neely
It's been a hot summer and not just in the forests. The stack of listings you had in June have sold, disappearing as rapidly as pancakes at a loggers' breakfast. No obvious source of new listings was apparent, and it looked as if cold calls might be the only antidote to a hot autumn overdraft.
At that point, before your mind and feet started moving in the same direction, a client telephoned to say that he had some property with commercial potential that he wanted you to list. The information he provided the next day confirmed that he had a vacant lot strategically placed in a commercially zoned block that was being redeveloped through land assembly and new construction.
The listing looked like a sure thing until your search of title revealed a restrictive covenant. Your initial optimism gave way to pessimism when an examination of the document that created the restrictive covenant disclosed that the land could be used only for single family dwelling purposes. However, the resulting discussion that took place among you, your client and his solicitor indicated that all was not lost.
He referred to Section 31 of the Property Law Act which gives a Court the power to modify or to cancel a restrictive covenant if the owner can satisfy the Court that any one of five different conditions referred to in Section 31 exists in favour of the owner. This Section became law in 1978, and more cases dealing with this power of modification and cancellation are being reported as more people become aware of the existence of the legislation and attempt to take advantage of it.
One case involved a vacant lot in Tsawwassen Iying in the midst of commercial development. The restrictive covenant registered against the title in favour of the previous owner provided that the lot could only be used for a single family dwelling, a restriction which applied to the lot at the time of its purchase in 1965. The owner intended to sell the lot but first wished to obtain a release of the restrictive covenant, obviously to maximize the sale price. The former owner objected, arguing that it wished to retain some control over any development that might take place on the lot.
The owner argued that Section 31 gave the Court authority to cancel the restrictive covenant if the Court were satisfied that by reason of changes in the neighbourhood the registered charge is obsolete. Since the evidence established that commercial buildings rather than single family dwellings surrounded the owner's lot, the Court had no difficulty in deciding that the restrictive covenant was obsolete and should be cancelled.1
In another case, an eleven lot subdivision which was established in 1933 restricted construction on any one lot to no more than two single dwelling houses. Over the years ten lots became twenty by reason of subdivision. An application was brought by an owner whose lot had been subdivided so that two houses were on the original lot. The application was to modify the restrictive covenant, the effect of which if successful would be to allow a third home on the area covered by the original lot. Twenty owners consented to her application - one declined. The owner opposing the application said that the original purpose of the restrictive covenant was to preserve a rural area. The owner applying for the modification said that the purpose of the restrictive covenant was to minimize sewage disposal problems which might have arisen and which were not now a problem.
The Court decided that there was nothing in the document creating the restrictive covenant to support either assertion. The only conclusion to be drawn from the wording of the restrictive covenant was that it was intended to create a residential area with a limited number of single family homes. It therefore modified the covenant because it did not consider that in doing so it would defeat the original purpose or cause any injury to the one owner who objected to the application.2
Section 31 gives the Court authority to modify or cancel not only restrictive covenants but also easements (see Column 11), land use contracts, statutory right of way, "a right to take the produce of or part of the soil, or an instrument by which minerals or timber or minerals and timber, being part of the land, are granted, transferred, reserved or excepted."
|1.||Laurence v. Century Holdings Ltd., S.C.B.C., 64 B.C.L.R. 33.|
|2.||Knight v. Stapleton, C.A. 63 B.C.L.R. 394.|
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