Items Affecting a Property

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. Real estate 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. 100-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 more 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 – at least four agencies become involved for the approval of drainage, subterranean crossing of service lines, and level crossings.

3. Agricultural Land Reserve

The Agricultural Land Reserve (“ALR”) is a provincial land-use zone where agriculture is the priority use.

The Agricultural Land Reserve Use Regulation identifies permitted farm and non-farm uses of ALR land. Landowners in the ALR who wish to pursue other uses must make an application under the Agricultural Land Commission Act and secure approval from the Agricultural Land Commission (“ALC”). The Agricultural Land Reserve General Regulation sets out application procedures.

More information about the ALR and the application process are available on the ALC website.

4. Islands Trust

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 may impact the view or use of the waterfront landowner.

5. Heritage Conservation Act

The purpose of the Heritage Conservation Act is to encourage and facilitate the protection and conservation of heritage property, including archaeological sites, in British Columbia. Its requirements may result in costly archaeological studies and/or limits on use of land for owners of those properties.

The Heritage Conservation Act is concerned with activities that may alter heritage sites 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 (Ministry of Forests) 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 issuing building permits if they would result in an alteration to protected heritage property.

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

Information respecting heritage and archaeological sites may be available from the local municipality or regional district. However, not all municipalities and regional districts maintain up-to-date information. Information about heritage and archaeological sites is also available from the Archaeology Branch, which administers the Heritage Register. The Archaeology Branch’s website contains a broad range of information on the Heritage Conservation Act and its application, including a Data Request Form for requesting information from the Heritage Register about specific sites. It may take several weeks to receive a response to requests for information about a specific site.

6. Riparian Areas Protection Act — Riparian Areas Protection Regulation

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

A real estate 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 RAPR could have a significant effect on the value and potential use or development of the property. This is because of legislated building/development setbacks and other requirements protecting riparian areas, including riparian vegetation and fish habitat.

A “stream” is broadly defined in the RAPR to include the following:

1. A watercourse or body of water, whether or not usually containing water; and
2. Any of the following that is connected by surface flow to a watercourse or body of water referred to in paragraph (a):
   1. a ditch, whether or not usually containing water,
   2. a spring, whether or not usually containing water, and
   3. a wetland.

Riparian vegetation and streams are protected by the Federal Fisheries Act, the B.C. Riparian Areas Protection Act and the Water Sustainability Act. Municipal bylaws may also apply.

While real estate licensees are not expected to be experts in the RAPR, they are expected to understand the implications of RAPR and are obliged to advise clients who are buying, selling, or developing property that is impacted by the legislation to seek independent professional advice.

If the RAPR 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 a setback that protects degradation of fish habitat. The SPEA is delineated by a QEP as part of the RAPR to protect fish habitat from land alteration including consideration of:

• Sediment and erosion control;
• Damage or alteration of vegetation; and
• Trails and landscaping.

For more information about riparian areas visit: Riparian Areas Protection Regulation (RAPR)

7. Ground Water Protection Regulation

The Groundwater Protection Regulation made under the Water Sustainability Act is intended to protect groundwater and wells from contamination. The Groundwater Protection 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.

Real estate licensees should advise buyers that the Groundwater Protection Regulation will impose obligations on them if they purchase a property containing a well. Additionally, buyers should determine the extent that the seller has complied with the Groundwater Protection Regulation.

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, BC Assessment values the land using a two-step process as detailed in the Assessment Act:

• 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 2016 calendar year will show up as added value on the 2018 Property Assessment Notice. For property taxes payable in the summer of 2018, part of the value may come from the harvesting of trees two years previously, i.e. timber harvested in the 2016 calendar year.

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
• Important Notice for Potential Purchasers of Private Managed Forest Land

9. First Nations Lands

The Real Estate Services Act (“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 are applicable.

The Real Estate Development Marketing Act (“REDMA”) may 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 REDMA. A real estate 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 REDMA would be applicable.

Real estate licensees should advise consumers that if REDMA does not apply, purchasers are not entitled to a disclosure statement, rescission rights, or other benefits of REDMA.

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 issues that buyers should consider include:

• Any potential land claims that may involve the property; and
• The potential for discovery of significant aboriginal archaeological sites on the property (see Heritage Conservation Act for more information).

In areas where First Nations have developed land for sale on a leasehold basis, real estate licensees acting on behalf of either the buyer or seller of the improvements on that land should ensure they are aware of leasehold considerations. Real estate licensees are strongly encouraged to advise their clients who may be considering purchasing a leasehold to seek independent legal advice.

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 licensees 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 B.C.

More Information:

• Invasive Species Council of BC

• Free invasive species identification course

11. Title Insurance

Title insurance is common in the United States, but it 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 and Survey Authority.

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.

12. 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.

13. Farm Land Classification

Real estate 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.

Under the Classification of Land as a Farm Regulation, in order for land to be classified as a farm in a taxation year, minimum specified gross annual values in respect of the farm operation may be required to be met.

The Classification of Land as a Farm Regulation also requires an application form to be completed by October 31 for any new farm to enable farm class to be granted the next tax year. The assessor may also require new owners of existing farms to file an application for farm class. Further, 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 BC Assessment website at www.bcassessment.ca.

14. Contaminated Sites

The Environmental Management Act and Contaminated Sites Regulation lay out requirements for identification, investigation, and remediation of contaminated sites in B.C.

When listing or selling a property, real estate licensees need a basic understanding of site contamination and its potential impact on property transactions. This can include:

• Identifying potential sources of contamination (such as oil tanks);
• Understanding the implications of contamination on property value and potential liabilities; and
• Providing essential advice to clients on how to address and mitigate contamination risks.

For example, when selling a property with a history of specified industrial or commercial uses set out in Schedule 2 of the Contaminated Sites Regulation, a site disclosure statement must be provided to a potential purchaser. More information on this requirement and others can be found on the Site Remediation website.

15. Dams

The Water Sustainability Act is the principal legislation for managing the diversion and use of water resources, including the issuing of water licences and approvals to allow people to divert, use, or store surface water or groundwater.

The Dam Safety Regulation under the Water Sustainability Act is intended to mitigate loss of life and damage to property and environment from dams. Dams can provide public waterworks, irrigation, power generation, flood mitigation, stock watering, and recreational uses. However, dams can pose a risk to persons, property, and the environment in downstream areas.

A “dam” in B.C. is defined in the Dam Safety Regulation and means a barrier constructed for the purpose of enabling the storage or diversion of water from a stream or an aquifer or both and the “works” associated with the barrier.

An “owner”, in relation to a dam, is also defined in the Dam Safety Regulation and means a person holding a licence for the dam; a person who should hold a licence for the dam but does not; or a person who held a licence for the dam immediately before the licence was suspended, cancelled, terminated, or abandoned. If there is no such person, then an “owner” may also be an owner of the land on which the dam is located or a person who had the dam constructed.

The Dam Safety Regulation sets out the frequency of activities for dams based on the dam’s failure consequence classification. Unless an exception applies, activities that must be carried out by an owner can include, in part:

• Equipment testing;
• Site surveillance;
• Inspections;
• Regular maintenance;
• Retention of records;
• Adherence to operation maintenance and surveillance (“OMS”) manual prepared by owner; and
• Adherence to dam emergency plan prepared by owner.

For some dams, periodic dam safety reviews by a qualified engineering professional are required. These comprehensive reviews can be costly.

Water licences, and all works associated with the dam, remain with the property following title transfers.

Prospective purchasers should be alert to the fact that a dam may not always be on the seller’s property and may be some distance from the property. It is not uncommon for agricultural properties to have a water licence that provides for the storage of water in a dam on Crown Land where tenure is typically in the form of a “Permit over Crown Land” (“PCL”).

Real estate licensees should advise buyers that the Dam Safety Regulation will impose obligations on them if they purchase a property with an associated dam. Dam owners may face liability for damage resulting from the works associated with the dam due to a breach or operational errors.

Prospective purchasers of property are advised to enquire about the existence of a dam and a water licence. A search can be conducted using the online Water Licence Search tool using property PID or client name. Additionally, a search can be conducted using the online BC Water Resources Atlas/iMap which contains detailed water-related data. Prospective buyers should be cautioned that some dams may not be found in the provincial inventory as they may be unauthorized.

Additionally, buyers should determine the extent that the seller has complied with the Water Sustainability Act and Dam Safety Regulation.

Additional information:

• Dam Safety — Province of British Columbia (gov.bc.ca)