Week 10: Chapters 22, 23 Flashcards by Nicholas Mikrogianakis

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

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Fixture

Definition

A chattel that is constructively/permanently attached to the land

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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

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Chattel

Definition

An item of personal movable property

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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

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Estate in Land

Definition

The right to uninterrupted possession of land for a period of time

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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

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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

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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

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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

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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

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Grantor

Definition

Holder of an estate in land that transfers it to another

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Grantee

Definition

Person that the interest in land is transferred to

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Deed

Definition

A written legal instrument by which interest in land is transferrred

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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)

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Life Estate

Reversionary interest

Definition

The right of the original owner to retake possession of property upon the death of the life tenant

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Life Estate

Remainderman

Definition

A third party with the right to the remainder of the fee simple after the death of a life tenant

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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.

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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

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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

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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

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Condo Corporation

Description

What’s it for? Definition?

Required to register condo corp
Land survey and detailed drawings of the property

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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

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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

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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

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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

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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

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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

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Week 10: Chapters 22, 23 Flashcards

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