It is no secret to our industry associates that we recommend having a lawyer review the contract, title search and property disclosure statement (and other ancillary documents) on a purchase of real estate prior to conditions being removed (and of course having appropriate conditions for those items when writing a contract).

One of the most common documents that we review from the title of a property that may impact the buyer’s use of such property is known as a statutory building scheme (“SBS” for short).  These documents are registered at the Land Title Office and form a “charge” (ie. encumbrance) against the property.  A SBS is generally put in place to maintain a level of consistency in a particular neighbourhood and frequently cover a number of properties in an area such that each homeowner has the benefit of their neighbours being covered by the same restrictions. The authority for the registration of a SBS is found in s. 220 of the Land Title Act and permits the imposition of restrictions “consistent with a general theme of development”.  It should also be noted that historically, these charges showed up as a combination of a restrictive covenant showing as a charge on the title and a notation for the SBS.  More recently, they simply register as a charge for the SBS.

The restrictions contained in a SBS will often cover construction on the property including specific guidelines requiring approval from the developer or an appointee, construction of pools or fencing (sometimes requiring the same approval), uses of the property, allowance of secondary suites or dwellings, storage of recreational vehicles and many other similar items. A SBS will remain registered against title of a property and bind the future owners of the property.  In some cases, SBSs will include an expiration date while others will not.  On occasion, we have come across a few SBSs that include end dates but provide for automatic renewals if steps are taken, or not taken, such that it is difficult to determine whether they remain in place or not.

Frequently, these charges are several decades old. In those cases, the question that often arises is “how does the property owner comply with requirement for approval?”  In some cases, with the older building schemes, the developer (if a company) no longer exists in British Columbia and has been dissolved.  In those cases, property purchasers are left in a difficult position because if they want to make changes to the property that require approval there is nobody to get approval from.

In order to get a SBS removed from title, there are two approaches that can be taken: all affected property owners can sign a discharge of the SBS which is often impractical particularly if the SBS was registered against a much larger property that has been subdivided several times; or, an application can be made to a court to have the charge modified or cancelled on the basis that the charge is obsolete.  This authority is found in s. 35 of the Property Law Act.  Of course, this process is both costly and time intensive and proper service would need to be made on all impacted properties which would have the right to contest the application. It is also unpredictable as the decision will be made by a court whether to modify or cancel the charge.

We have been asked, on occasion, whether the fact that the developer no longer exists means consent is not required.  Technically speaking, this is not the case.  The parties that have the right to enforce a SBS are the other owners of properties covered by the same SBS. The dissolution of the developer does not, in itself, invalidate the building scheme or the requirement for approval.  If a purchaser wants to have security that they do not need to comply with the terms of the SBS, they would require either the SBS being discharged or a court order.

In many cases, it becomes a risk analysis for the homebuyer in light of the potential consequences of an application by a neighbour to enforce the SBS. It is important to note that these charges run alongside the requirements of the appropriate municipal authority.  Any changes requiring municipal approval, may require steps to be taken under both the Statutory Building Scheme and the city regulations.

Author: Una Gabie

This information is general in nature only. You should consult a lawyer before acting on any of this information. This information should not be considered as legal advice. To learn more about your legal needs, please contact our office at (250)448-2637 or any of our lawyers practicing in the area of business law at the following:

Una Gabie: una@touchstonelawgroup.com

Jennette Vopicka: jennette@touchstonelawgroup.com

Danielle (Dani) Brito: danielle@touchstonelawgroup.com