Week 10: Chapters 22, 23 Flashcards
Real Property
Definition + what it includes
- Land and anything that is permanently attached to it
- Includes minerals in ground and airspace above
- Also includes fixtures
Fixture
Definition
A chattel that is constructively/permanently attached to the land
Fixture Question of Fact
- Can it be removed without causing damage to chattel or to property?
- if the answer is yes then it is a chattel
- i.e. a shed that is attached to the property only by its own weight
Chattel
Definition
An item of personal movable property
Historical development of land rights under the Feudal system
- People could be granted use of land in return for military or agricultural service
- The person is granted use of the land only as long as they provide the service
- At the end of service, the land reverts (escheat) to the crown,
crown always retained ownership
Estate in Land
Definition
The right to uninterrupted possession of land for a period of time
Freehold Estate (historical under feudal system)
- Fixed services attached to the land
- i.e. use of a fully armed knight for 40 days or an equivalent payment
- Over time it transitioned to just a payment in money
- Ultimately estates in land become permanent
Fee Simple
Definition + Holder’s Rights
- The highest form of land holding available in Canada
- All land in Canada is still technically owned by the crown
- Holder in fee simple can use the land however they see fit, pass it down to heirs, sell it, or will it
What is Escheat and why does it happen?
- The reversion of land in fee simple back to the crown when a person of the fee dies with no heirs
- only occurs when land wasn’t disposed of via will, sale, or inheritance
Crown Patent
Definition + What the Crown Retains
The means by which estates in land are granted to individuals
Crown retains the rights to minerals, lumber, etc.
- need to buy rights to these separately
Land rarely escheats back to the Crown
Expropriation
What is it? How does it happen?
- The forceful taking of land by the government for public purposes
- Crown must pay the person a fair price at time of possession
- Usually for things like expanding highways or building hydro lines
Grantor
Definition
Holder of an estate in land that transfers it to another
Grantee
Definition
Person that the interest in land is transferred to
Deed
Definition
A written legal instrument by which interest in land is transferrred
Life Estate
Definition + What Rights does it give?
- 2nd highest form of land ownership after fee simple
- Gives a person the same rights as fee simple but only for their lifetime
- It’s usually the tenant’s lifetime but technically can be anyones
- reversionary interest
- When the grantor gives a life estate to the grantee they still retain fee simple status (Grantor = Remainderman)
Life Estate
Reversionary interest
Definition
The right of the original owner to retake possession of property upon the death of the life tenant
Life Estate
Remainderman
Definition
A third party with the right to the remainder of the fee simple after the death of a life tenant
Life Estate
Can the holder in life estate commit waste?
No, they cannot do things that will hurt the value of the property
- can’t cut down shade trees
- can’t destroy buildings
- etc.
What is the life tenant responsible for if the land is still mortgaged?
- They’re responsible for the interest but not the principle
- They pay land taxes but not local improvement taxes the remainderman does
Leasehold Estate
Definition
- Grant of right to possession of a parcel of land for a period of time in return for payments to the land owner
- A contract with certain rights and obligations usually for a fixed term
The Condominium
Definition + Who runs it and how it comes to exist
A form of ownership of real property, usually including a building, in which certain units are owned in fee simple and the common elements are owned collectively by unit owners
Condos are run by a condo corporation
- has no share capital
- comes into existence by filing “description” and “Declaration” in the registry office
Condo Corporation
Description
What’s it for? Definition?
- Required to register condo corp
- Land survey and detailed drawings of the property
Condo Corporation
Declaration
What’s it for? Definition?
- Required to register condo corp
- sets out rights and obligations of unit owners, general outline for management and operation of condominium as a whole
Common elements of a condominium
List them + what is an important feature of them?
Common elements are held jointly as “tenants in common”
Exterior walls, stairs, hallway, surrounding land, amenities, etc.
Can’t separate the condo from common elements
Maintenance of common elements is apportioned by value of the units and charged monthly
Who manages the Condo Corporation?
- There is a board of directors for the corp who have no share capital
- Owners of units elect directors and vote in meetings
What is the function of Condo Corporation Board of Directors?
List off functions
Keep condo in good state, insure premises against damages, collect condo fees, enforce and bylaws established
Land Titles System for Registry of property interests
Definition
A provincial government operated system for the registration of interest in land where the government confirms and warrants particular interests in land
Easements
Dominant Tenement
Definition
The parcel of land that the easement benefits
Easements:
Right of Way
Definition and most common reason why
A permanent right that’s binding on future land owners
A right to pass over the land of another, usually to gain access to one’s property
- for things like powerlines
Right of Way by Necessity
When does this happen? What do the courts do?
- For if a seller sells a landlocked parcel of land and the other person cannot access it
* Courts will grant a mandatory easement
Prescriptive Right of Easement
- When someone openly and notoriously uses the lands of another with knowledge of property owner
- If the owner takes no steps to stop this use for 20 years then the other person is given the right to easement
- Land Tiles system has abolished this in Ontario
Restrictive covenant attached to land
What is it? What is its purpose?
- attaches on the deed of the land
- Agreement not to use land in a particular way
- Reasonable and for the benefit of adjacent property owners, may be enforced
- Maintain property values, character of area
- Zoning usually makes use or restrictive covenant unnecessary, still widespread use in subdivisions
Mineral Rights
Rules in older provinces + present day
- In older provinces, mineral rights are included except for gold and silver
- Now the Crown reserves the mineral rights
Profit a Prendre + Mineral Rights
Define Profit a Prendre. How does it apply to mineral rights?
- Profit a Prendre means the right to take something from another’s land
- If a person acquires the mineral rights to another person’s land it must be in writing, in proper deed form
- If they don’t have surface rights, they must compensate the owner for its disruption through miningq
Riparian Water Rights
What are they? What rules surround them?
A riparian owner is someone who owns property with a waterway
At common law they have the right to use the water for domestic or commercial use
- this cannot interrupt the flow
- They must replace water used
- A dam cannot restrict water flow downstream or force water upstream
- cannot obstruct fish or pollute the water
If these rules are violated, the people downstream can bring an action
Possessory Interests in land
What does it mean? How does it happen?
- When someone engages in open notorious adverse possession of someone else’s property over time
- will give occupant rights of possession,
- Period of possession must be continuous, a break in time, starts over and the occupier can convey possession to another without breaking time
- No longer exists under Land Titles System
3 Criteria for Possessory Interests in Land
- actual possession
- with the intention of excluding owners or persons lawfully entitled
- discontinuance of possession of owner or persons lawfully entitled
Encroachments
Definition + How does it occur
- A possessory right to the property of another that may be acquired by the passage of time
- Where a structure or building of one land holder’s land encroaches on the land of another
- Continuous use with no objection means the land holder loses the right to object
Joint Tenants
Definition + Right of survivorship
- Each tenant holds an undivided equal share in the property
- Subject to right of survivorship
- When a joint tenant dies the other joint tenants are automatically entitled to that tenant’s share
- Can’t will interest
Tenants in Common
Definition + What happens when one of them dies
- The joint holding of interests in land that doesn’t have to be equal
- Not subject to right of survivorship meaning you owners can will their interest
Registration of Property Interests Historically
Chain of title + Fraud Prevention
- Holder of land had to keep all documents relating to title and maintain “chain of title” to establish good title to land
- In order to prevent fraud, the tranfer of land wasn’t legal until all of the title documents were passed on
Registry System
What is it? How chain of title and transfer work?
- The older system
- Each township plot or land parcel is registered
- Onus is on the purchaser to ensure there is a clear chain of title
- If the purchaser completes a title search and finds a defect then they’re not obligated to go through with the transaction
Land Titles System
What is it, how does title work?
- The newer system for land
- Title is as represented on the document, no need to search
- Province registrar makes sure title is clear
- If the title is defective the province compensates the party for the loss
What is a deed called under the land titles system
A transfer
What is a mortgage called under the land titles system
A charge
Mortgage
Definition, mortgagor, mortgagee
- A formal agreement for debt secured by an interest in land (land is collateral)
- Debtor is called the mortgagor
- Creditor is the mortgagee
Security
What is it? How does it apply to mortgages?
- The creditors ability to use property held by the debtor/mortgagor to satisfy an unpaid debt
- When a mortgage is secured by real property, the creditor/mortgagee may sell the debtor’s interest in land to recover money owed.
Mortgages in a Land Titles System
How do they work? Does title transfer to mortgagee?
- in a land titles system the mortgage is registered as a charge on the title
- It is a running covenant with the land until the debt is paid
- If debt is defaulted on, mortgagee can then take steps to recover their money
History of the mortgage
Evolution of who got title? How did the loan work?
The mortgager used to have to surrender possession and title to the land to borrow the money
* this then evolved to just the title
The motgagor had the exclusive right to redeem the title from the mortgagee
When the debt is paid, they get the title back
Legal Mortgage
What is it? What happens to title?
The first mortgage on real property whereby the owner of land in fee simple transfers the title of the property to the mortgagee on the condition that the title will be reconveyed when the debt is paid
Legal Mortgage in Ontario
What happens with title? Rights of the mortgagee?
- Mortgagor keeps title, and Mortgagee gets certain rights, under the mortgage “contract”:
- to use the mortgagor’s property to satisfy the debt
- Mortgage is registered on title, any person interested in purchasing the property is thereby given notice of the mortgage
- the mortgage is an “encumbrance” on title, any purchaser will want it removed, and lender advancing money will want it paid out
Equitable Mortgage
A mortgage subsequent to the first or legal mortgage
* A property can have more than one mortgage
* For example, a $100,000 property has a $50,000 mortgage out
* the owner can take out another mortgage
How much of a properties values are lenders okay with mortgaging out?
95% of the property’s value
Priorities between mortgages
Priority refers to who gets paid first should the property be sold
* The order of priority for mortgagee’s is in order of registration
* Riskier to be a subsequent mortgagee
Rights of a mortgagor
Rights
* Mortgagor is entitled to retain possession and title of the property as long as they comply with the mortgage
* Entitled to discharge once the debt is paid
Duties of a Mortgagor
Duties
* Pay the mortgage, pay property taxes, insure the premises, not commit waste, repair damages
Mortgagor’s Duty to Pay + Acceleration Clause
- Options to pay can take many forms
- Biweekly, monthly, etc
Acceleration Clause
* If the mortgagor fails to make payment, the mortgagee can render the outstanding balance on the loan due immediatly in a single instalment
Mortgagor’s duty to pay taxes
- The mortgagor is obliged to pay property tax when they’re due
- Municiplaity has priority over other lenders so the mortgagee wants mortgagor to pay taxes so they have priority
Mortgagor’s duty to insurance
Much of a property’s value is based on its fixtures so the mortgagee demands that they be insured
Mortgagor’s duty to not commit waste
Waste refers to anything that reduces the property value
Discharge of the Mortgage
- If the mortgagor complies with the terms and conditions of the mortgage, they’re entitled to discharge of the mortgage
- Mortgagee releases all their rights, title, etc. to the mortgagor
What is a discharge of mortgage called under the registry system vs. land titles system?
Registry:
Discharge of mortgage
Land Titles Sytem:
Cessation of charge
Assignment of Mortgage
- Refers to a mortgagee assigning their interest in the mortgage
- It is technically an interest in land so it must comply with the jurisdiction’s legislation
- No consent from the mortgagor is required but they must be notified
Sale of property when under mortgage
- Unless agreement says otherwise, mortgagor free to sell property
- Mortgagees often require payment in full of mortgage if a sale
- If the mortgagor didn’t pay off the mortgage and the purchaser defaults, the mortgagee can look to original mortgagor, (unless mortgage was assumed)
- An action on the covenant to pay,
Remedies for Mortgage Default
List the 4 off
- power of sale (by term of contract / mortgage)
- foreclosure
- judicial sale
- possession of property
Power of Sale
What is it? What happens as a result of it?
- Permits the mortgagee to sell or lease the property subject to the morgagor’s default
- It’s a term in the mortgage contract so there’s no need to go to court
- Mortgagee must wait for a time period to give the mortgagor a chance to get back in good standing
- Mortgagee must conduct the property’s sale in good faith
- Mortgagor gets paid out any surplus from the sale on the debt
- Mortgagor must pay out any shortfall from the sale
Foreclosure
What is it? How does it work?
- A court action, not a term of the contract
- The action forecloses or extinguishes all rights of mortgagor and subsequent encumbrancers
- Mortgagors and subsequent encumberancers have the right to redeem
- The court order is not always final even though they say it is
- If successful, no obligations to mortgagor for surplus, but no ability to claim for shortfall
- Expensive and lengthy legal process
Judicial Sale
What is it? What is the advantage?
- Mortgagee applies to get, payment, and sale of property under the court
- Property is sold, debtors are paid, surplus (if any) goes to the mortgagor
- Mortgagor may apply for this when they are under foreclosure
- Main advantage is that subsequent mortgagors are also paid off
