Property Covenants in Whistler
These units provide for UNRESTRICTED use by the owner. This means the owner can personally use the unit as much as they want, or the owner can gain revenues by renting the unit on a nightly, weekly, or monthly basis. In most complexes the owner can manage the rentals themselves or choose a management company to act for them. This type of property works best for owners who want the flexibility of being able to use the property when they want, and also tobe able to manage the rentals of the property how they want. Phase I properties generally cost more, but they are also usually larger (in terms of square footage), provide more privacy for the owner or guest, and historically, they have provided greater capital appreciation.
These units provide for RESTRICTED use by the owner. This means the owner can personally use the unit to a maximum of 28 days in the winter and 28 days in the summer. These units are generally incorporated into an ongoing “hotel” operation. Benefits include Revenue as well as the standard hotel services. (Cleaning and daily maid service.) These types of units are increasing in number and are best suited for investors interested primarily in revenue, with occasional personal use. Also, the buyer of a phase 2 property is looking for a “hands off” turnkey management approach – and is willing to pay the price associated with that. With a Phase II property, you must utilize the front desk and management company / hotel to market and manage the unit you have purchased.
Typically, the rental revenues are pooled and then paid out to the owners based on the Interest Upon Destruction (IUD) of the unit. Key variables in determining the IUD are the size and location of the unit within the property. It is very important to clearly understand the Rental Management Agreement and to have full knowledge of your possible obligations. In some instances, the Owner can be held responsible for Restaurant, Conference Facility and any possible revenue or building shortfalls, not just the strata units of the Owners.
There are certain Strata Complexes which have no restrictive covenants registered on title. Owners wishing to rent will be limited to monthly tenancies or leases under the Residential Tenancy Act. The Strata Corporation of the complex may have restrictions which disallow tenants of any type.
There are certain Strata Complexes which have a covenant on title restricting the OCCUPANCY to someone who is employed by a Whistler company, self employed, or a retiree. There is no restriction on the ownership – just the occupancy. Owners wishing to rent will be limited to monthly tenancies or leases under the Residential Tenancy Act. The Strata Corporation of the complex may have restrictions which disallow tenants of any type.
The Strata Concept
A strata development is a special way of subdividing land and buildings into parts for separate ownership with common features.In a strata development, individuals can own separate parts of the same development, but share common areas and related expenses. The part of the property that an individual separately owns is called the “strata lot”. Informally, we often call this part the strata “unit”. The remainder of the property is called the “common property”. A strata lot can be owned by more than one person, or by a corporation or partnership or by a combination of these. A strata owner owns the strata lot plus his or her proportionate share of the common property. For example, in an apartment style strata development, the owner purchases fee simple title to his or her apartment, being the strata lot. The owner also has a proportionate fee simple interest as a tenant in common with the other owners in the common property, which includes, in our example, the roof, the exterior of the building, the entrane lobby and the recreational facilities.
In a strata plan, everything is either part of a strata lot or part of the common property. Generally speaking, a developer who intends to develop a strata project will either purchase the necessary land or lease it. The result is that developers may sell freehold or leasehold strata lots.
If the developer purchases the land for development, the developer becomes the registered owner in fee simple. After the developer subdivides the land by depositing the strata plan, the Registrar of Land Titles records the developer as the fee simple owner of each of the newly created strata lots. The developer can then sell fee simple title to the buyers of the strata lots. We call these “freehold” strata developments because buyers acquire fee simple title to their strata lots from the developer.
If the developer leases the land for a strata development, he or she may only lease the property from the federal, provincial or a municipal government or from some other public authority. The developer must lease the land for a term of at least fifty years or more. The government or other public body that owns the land is called the “leasehold landlord”. The developer leases the land under a document called a “ground lease” (sometimes called “a head lease”) that sets out the terms and conditions upon which the developer has leased the property. When a developer wishes to register a strata plan over land that is subject to a ground lease, it is called a “leasehold strata plan”. To ensure, among other things, that the leasehold landlord is aware of the developer’s intentions, the Registrar of Land Titles will not accept the developer’s leasehold strata plan unless it is signed by the leasehold landlord.
A leasehold landlord may impose restrictions on the further leasing, assignment or occupancy of the strata lots included in the leasehold strata plan. The restriction must be set out in a Schedule of Restrictions filed in the Land Title Office when the strata plan is deposited. The restrictions are binding on the strata corporation and everyone who buys a leasehold interest in any of the strata lots.
Bare Land Strata
Strata developments occur with and without buildings. The term “bare land strata” describes a development in which there are no buildings when the subdivision occurs. In many cases, buildings or other improvements are added later, usually by buyers, but we still call the development a “bare land strata”. There are many examples of bare land strata developments. For instance, Figure 2 illustrates how a developer with a five acre parcel of land might create a bare land strata development by subdividing the property into several bare land strata lots with a cul-de-sac in the centre for road access.
Mixed Use Strata
Strata developments can have many uses. For instance, residential developments are designed to live in. Commercial developments usually contain stores or offices. Industrial developments often contain manufacturing facilities or warehouses. And so on. Developers sometimes create strata developments that share two or more different kinds of uses. Typically, these developments contain residential strata lots with strata lots designed for other uses, like stores or offices. We call these “mixed use” strata developments.
To create a strata development, a developer must first subdivide the land, including any buildings, into strata lots together with common property. This is done by depositing a document called a “strata plan” at the Land Title Office. The plan must show which parts are strata lots for purchase by individual owners, and which portions are common property. The strata plan is an essential document for every strata owner.
In every strata development, the Schedule of Unit Entitlement determines, among other things, the liability of each strata lot for strata fees (informally called “maintenance fees” under the old Condominium Act), and special assessments (formerly known as “special assessments” under the Condominium Act). The only sure way to verify a strata lot’s contribution for strata fees or a special levy is to check the Schedule of Unit Entitlement in the relevant strata plan. Appendix 1 contains a sample excerpt from a strata plan that shows a Schedule of Unit Entitlement. Using the example in Appendix 1, suppose we want to calculate the contribution of Strata Lot 70 toward a special levy of $1,000.
The Strata Property Act permits strata corporations to raise money by special levies against the owners. A special levy is equivalent to what business partners sometimes describe as a “cash call”. For instance, the strata corporation might need a special levy to pay for major repairs if there is not enough money in the CRF, or if the owners otherwise prefer not to deplete the CRF on this expenditure.
Depending on the way the levy is applied against the owners, a 3/4 or unanimous resolution is required. A 3/4 resolution is necessary if the strata corporation intends to collect contributions to the special levy according to the Schedule of Unit Entitlement, like strata fees. On the other hand, if the corporation intends to seek contribution on some other basis, a unanimous vote is necessary.
The strata corporation must use the money collected for the purpose set out in the resolution. Afterwards, the corporation must inform the owners about how the money was spent.
The Schedule of Standard Bylaws in the Strata Property Act applies to every strata corporation in the province, regardless of when the strata corporation was created. The Schedule of Standard Bylaws found in the Strata Property Act can be viewed by accessing the Strata Property Act on the Queens Printer website at www.qp.gov.bc.ca/statreg/.
The strata corporation may amend the standard bylaws by changing their wording or otherwise deleting or adding to them. In other words, a strata corporation can create a custom-made bylaw to change anything in its standard bylaws. For instance, a custom-made bylaw can override a standard bylaw, add something new that is not present in the standard bylaws, or delete something from the standard bylaws. A custom-made bylaw is called an “amended bylaw” in the Strata Property Act.
Owners may rent their strata lots to tenants unless otherwise restricted. Rental restrictions are found in a strata corporation’s amended bylaws or, in the case of a leasehold strata plan, in a Schedule of Restrictions filed with the leasehold strata plan.
Estates and Intersts in Land
Real property generally consists of land and whatever is erected, growing upon or affixed to the land. What is affixed and what is not is explained later in the chapter under “Fixtures and Chattels”. Land also includes rights related to the land. Personal property is, in effect, everything else, and it generally includes any right or interest which one has in moveable objects.
Airspace, Subsurface and Water Rights
At common law, a landowner’s rights were said to extend down to the centre of the earth and up to the heavens. The latter part of this concept has been modified so that a landowner now owns or has rights in the airspace above his or her property only to the extent that the landowner can make effective use of it. Even this concept is altered by statutes; for example, the federal Aviation Act allows an aircraft to pass through the airspace without liability for lawsuits if no physical damage results.
As well as reserving rights to various minerals, the Crown also reserves other rights for itself. For example, the Crown has kept wide powers to make further “reservations” etc., under section 23 of the Land Act. In addition, because the Crown is the absolute owner of property, it may expropriate property for a wide range of purposes. Usually, any expropriation is accompanied by compensation to persons whose property is taken, but this is not always true. Under section 23 of the Land Act, the beds under bodies of water were appropriated by the provincial government without provision for compensation. Because the Crown reserves many rights to itself, a landowner’s property rights can be greatly limited.
Further limitations can be imposed by municipalities. For example, municipalities have the right to require a person subdividing land to provide for and construct highways. This power is not, of course, as wide as that retained by the Crown because the power of the municipality only arises where there is a subdivision of land.
Fixtures and Chattels
In most situations involving a sale of land, the contract of purchase and sale expressly identifies those items included in the purchase price and those items which the vendor can remove when he or she vacates. Accordingly, there is generally no confusion as to the property rights of the vendor and purchaser upon completion. However, when a contract of purchase and sale does not expressly identify those items which a vendor can keep upon completion, it may sometimes fall to the court to establish which party owns what property.
When determining the property rights of a purchaser or vendor in a sale of land, the courts distinguish between fixtures and chattels. Items that are fixtures go with the land and will belong to the purchaser upon completion while chattels remain the personal property of the vendor.
Description. In a joint tenancy, each co-owner owns an undivided interest in the whole of the property. The essential feature of this type of ownership is the right of survivorship. That is, when one joint tenant dies, the entire tenancy remains with the surviving joint tenants. Therefore, joint tenants cannot leave their interests to anyone in their wills. The result is that the surviving joint tenants acquire the whole of the estate. At common law, four “unities” or principles had to exist and be maintained in order to create a joint tenancy and to have it continue.
Tenancy in Common
A tenancy in common has only one unity, that of possession. Therefore, tenants in common may have different shares in their property; for example, two may have a quarter share each and one may have a half share. A tenancy in common may be terminated:
- by an agreement between the parties to sell one tenant’s interest to the other; or
- by an agreement between the parties to sell the whole interest to a third party; or
- by a court order under the Partition of Property Act.
An easement is a privilege acquired by a landowner for the benefit of his or her land over the land of another. The land receiving the benefit is called the dominant tenement and the land over which the right is exercisable is called the servient tenement. Figure 1 illustrates how a typical easement operates.
A restrictive covenant imposes a restriction on the use of one person’s land for the benefit of another piece of land. The restriction must be a negative obligation. It does not matter whether the wording of the covenant is positive, if it is negative in effect. The person who imposes the restriction is called the covenantee and the person who agrees to be bound by the restriction is called the covenantor.
The Law of Contract
Void, Illegal, Voidable and Unenforceable Contracts
Depending upon which essential element is missing, the effect on the contract will vary. Contracts can be ineffective in four different ways: they can be void, illegal, voidable or unenforceable. It is important to understand what these different forms of deficiency mean in practical terms. Void. A void contract is one which has never existed at all. Even if the parties want it to exist and to have effect, it cannot. The parties are in the same position as if they had never attempted to contract. Money paid by one party to the other will be repayable and no rights can be acquired under it. For example, where parties seek to make a contract in circumstances where there is a mutual or common mistake (discussed later in chapter) the resulting contract will be void.
An illegal contract is one which offends against public policy or against a particular statute (e.g. a contract for murder or a betting contract). Illegal contracts are also void, but the results of a finding of illegality might vary. In some cases, a person who has paid money under an illegal contract will not be able to recover the money, even though the contract is void. In other cases the effect of the finding of illegality will not be so severe. Legality of purpose is one of the essentials for creating a contract discussed below.
A voidable contract is one which one of the parties has the option to rescind (cancel). Until the contract is rescinded, it is valid and binding on the parties. An example of a voidable contract would be a contract for the purchase of a car by an infant. Such a contract is voidable by the infant, but it is binding upon the other party. If it is rescinded by the infant, neither party will have any further obligations under the contract.
The right to rescind may be limited where the other party has acted in such a way that it becomes inequitable to allow the contract to be cancelled.
An unenforceable contract is one which has the essentials of a valid contract but it cannot be sued upon for some procedural reason; for example, s.59 of the Law and Equity Act (discussed in Chapter 11) requires most contracts affecting land to be in writing in order to be enforceable in court, therefore oral contracts respecting land will not be enforceable in many instances.
Termination of a Contract
Once a contract has been made, it can be terminated or discharged in many ways. These are:
This is the manner intended by the parties at the outset to be the proper way to terminate their contract. When the final act of performance occurs, the contract is at an end. If substantial performance is made, but one of the parties will not accept it, the party performing it will have met his or her obligations under the contract, and the party refusing such performance will be in breach of the contract.
Often the parties will agree to waive full compliance with the terms of the contract. If both parties still have obligations left to perform, the mutual waiver of their obligations will be sufficient consideration to bind them. Otherwise, either new consideration will have to be given to support the variation, or the agreement to waive the balance of the contract will have to be made under seal. The same rules apply if the parties decide to substitute a new agreement for the first one.
Non-Fulfilment of a Condition Precedent
A condition precedent is the formal term for what is usually called a “subject” clause in the real estate industry. A condition precedent is a condition in a contract which must be satisfied before the contract is to be performed. For example, a residential home may be sold under a contract of purchase and sale which contains a clause allowing for a mortgage to be arranged by the purchaser. If the other issue cannot be resolved, the contract will be terminated.
Law of Agency
What is an Agent?
An agent is a person authorized to act on behalf of another person, called the principal. The essence of the agency relationship is that the agent has the authority to represent and act for the principal in dealings with others. In real estate, the agents are the brokerages who, through their related licensees, represent their principal in a particular transaction or service. Historically, real estate agents have usually acted on behalf of the seller to sell real property and their authority comes from a listing contract. In 1994, most real estate boards in British Columbia adopted a new system of agency now called “assumed buyer agency”. In this system, unless otherwise indicated by the parties, the licensee working with the buyer is an agent for the buyer, while the licensee who lists the property remains as agent for the seller. Throughout this chapter, unless otherwise indicated, the term “agent” will refer to agents generally rather than to real estate agents.
Capacity to Act as an Agent
Generally speaking, any person of sound mind can act as an agent. Because an agent is not a party to the contract between the principal and a third party, the agent does not need the capacity to contract. For example, an infant may act as an agent. However, an agent is a party to the agency contract and, therefore, an infant agent could use his or her own incapacity to repudiate the agency contract.
With respect to real estate agents, there is one important limitation on capacity. Anyone in British Columbia acting as an agent in relation to the provision of real estate services, whether it be trading services, rental property management services or strata management services, must be licensed under the Real Estate Services Act.
Definition of a Mortgage
It is important to distinguish between the financial and legal aspects of a mortgage. In the chapters on mortgage finance, the emphasis is on the mortgage loan. Legally, however, a mortgage is not a loan. It is an interest in land created by contract as security for a loan made by a lender (the mortgagee) to the borrower (the mortgagor).
Although almost all mortgage agreements contain a promise to repay a debt, a mortgage is not a debt itself. It is evidence of a debt. More importantly it is a transfer of a legal or equitable interest in land on the condition that the interest will be returned when the terms of the mortgage contract are performed. This usually means upon repayment of the debt. A mortgage agreement usually transfers title of the borrower’s land to the lender. However, the transfer has a condition attached. If the borrower repays the loan, or performs some other obligation under the contract, the transfer becomes void or the lender must transfer the interest back to the borrower.
“Alternative” Mortgage Repayment Plans
Increased competition in the supply of mortgages, as well as changes in borrowers’ preferences have led to a dramatic increase in the number of mortgage products available on the market. Borrowers are now faced with far more choice and flexibility in terms of repayment plans, allowing them to select the one that best suits their individual needs.
One option for borrowers to consider is whether to choose an open or closed mortgage loan. Open mortgages allow borrowers to prepay a portion of their mortgage or the entire amount at any time with typically only a small administrative fee. Closed mortgages, on the other hand, prevent borrowers from prepaying their mortgage without penalty, except where they are permitted under the terms of their mortgage contract or by the Interest Act.
The flexibility of open mortgages comes at a higher cost to borrowers, imposing higher interest rates than an alternative closed mortgage with a similar term. Furthermore, open mortgages generally have shorter terms, usually ranging from six months to one year. Another option for borrowers to consider is a convertible mortgage. These are typically short-term closed mortgage loans (usually 6 months or one year), with a fixed rate that allow borrowers to convert their mortgage to a longer term, while locking in at the current interest rate. This option to convert to a longer term at the current rate may be exercised when borrowers expect current rates to rise.
Variable Rate Mortgage (VRM)
This type of loan, also known as a floating or adjustable rate mortgage, differs from a constant payment mortgage because the interest rate charged on the loan may be changed during the term of the mortgage. Generally, these loans are initially set up like a standard, partially amortized loan, based on the current prime rate of interest. The loan is reviewed at specified intervals and if the market interest rate has changed, the mortgage repayment plan is altered by changing either the size of the payments or the length of the amortization period (or a combination of both). For example, a VRM may stipulate that a borrower pays interest equal to “prime minus 0.5%”. Variable rate mortgages may also include a cap feature which still allows interest rates to fluctuate, but provides a guarantee to borrowers that rates will not exceed the capped level. This feature provides some security to the borrower while still allowing them to anticipate changes in future rates. Many variable rate mortgages also include the option to convert to a fixed rate. Because there is a wide variety of variable rate mortgage products available from numerous lending institutions, it is imperative that borrowers conduct the proper research in order to select the mortgage with the features that best fit their individual needs.
Vendor Take-back Mortgage (VTB)
This loan is like a conventional first or second mortgage except that it is the vendor who carries the financing. If the VTB mortgage contract rate is different than the market rate, this could affect the perceived market value of the mortgage, in terms of investment analysis.
Zero-Down Payment Mortgage
A zero-down payment mortgage allows borrowers to take out a loan without making a down payment on their purchase as required by other mortgage types. It is usually limited to first time home-buyers of owner-occupied properties who would otherwise be unable to obtain a mortgage because they could not provide a sufficient down payment. The loan typically operates by providing borrowers with a cash back feature of 5% of the purchase price of the home, effectively lowering the down payment to 0%. However, they often require the borrower to provide 1.5% to cover closing costs on the sale, in effect, meaning a 1.5% down payment, not 0%. These loans are often contracted with fixed rates and closed terms of either five or seven years.
Graduated Payment Mortgage (GPM)
This type of loan offers lower payments in early years of the loan which gradually increase over time. The low initial payments may facilitate financing for potential purchasers who otherwise might not have been able to qualify, which increases housing affordability. This type of mortgage has been used primarily with federal government “home ownership” mortgage lending programs, and due to the low interest rate environments, have not been very common in recent years.
Reverse Annuity Mortgage (RAM)
In a reverse annuity mortgage, the lender makes a series of payments or advances to the borrower over the term of this mortgage. At the end of the loan term or upon the death of the borrower, the loan balance, consisting of the accumulated principal advances and the interest due, is repaid by refinancing, by sale of the property, or from the proceeds of the borrower’s estate. This innovative mortgage has been introduced in Canada as a means of supplementing aged homeowners’ income, typically upon retirement. The arrangement allows the borrower to keep their home for a period of time while subsidizing a low retirement income.
Combination mortgage products get their name from the fact that they switch between a fixed and variable interest rate during contractual term of the loan. A combination mortgage can be thought of as having two payment periods. During the first period, the borrower will be locked into a fixed interest rate. Then, during the second period, the interest rate becomes adjustable and will vary with the prime rate. When a borrower is entering into a combination mortgage they will need to determine the duration of the initial payment period, or the period where the fixed interest rate will be used. This can span anywhere from 2 to 10 years depending on the lending institution and the needs of the borrower.
The combination mortgage is growing in popularity as it offers borrowers peace of mind by incorporating both the fixed and variable rates. In the near future the fixed rate hedges borrowers’ risk against increasing interest rates, while the variable rate offsets borrowers’ uncertainty of whether interest rates will decrease in the more distant future.
Local Government Law
Agricultural Land Commission Act
The Agricultural Land Reserves were established in the early 1970s as the provincial government’s response to a perceived critical shortage of agricultural land. The legislation established an independent government agency (now the Agricultural Land Commission) which, after consultation with the regional districts, established agricultural land reserves (ALRs). The approximately 5 million hectares of land within ALRs may not be used for any non-farm purposes, nor may it be subdivided without the commission’s approval. Popularly known as the “land freeze”, the effect of the legislation was to stop development of agricultural land. British Columbia’s geography, generally a series of mountain ranges with plateaux between them, limits the total arable land base to about 4% of the province’s total area. As well, settlement generally originated on the best agricultural land. Before 1972, urbanization was increasing rapidly and between 4,000 and 6,000 hectares of prime agricultural land was being lost every year. The objective of the Act’s restrictions is to preserve areas of land to be available for agriculture if and when needed. The total area of land presently within ALRs is within one-half of one percent of the total area in 1973.
The legislation does not apply to:
- land parcels registered as less than 2 acres; and
- land being used for non-farm purposes for more than six months immediately before Dec. 21, 1972.
Landowners who fall within the latter exemption must still obtain commission approval to expand or alter existing nonfarm operations.
The Agricultural Land Commission has the power to:
- pass regulations affecting ALR land;
- exclude land from an ALR; an ALR landowner can apply to the commission, through the local government, to have land excluded. Once excluded, the land is not subject to the Act, only to local land use bylaws and regulations;
- allow non-farm use of the ALR land; upon successful application, the land may be used for non-farm use but remains within the ALR and subject to the Act and local bylaws and regulations;
- allow subdivision of ALR land; upon successful application, the land may be subdivided but remains within the ALR and subject to the Act and local bylaws and regulations.
There is a limited appeal process available if an application is refused. The local governments continue to have land use planning and regulatory responsibilities for ALR land but any local legislation must be consistent with the provincial Act and is subject to the commission’s decisions; the commission works closely with local governments so that the local bylaws and regulations are consistent with the provisions of the Act. If there is a conflict between local laws and the Act, the local laws are invalid to the extent of the inconsistency. The commission regularly reviews official community plans and local bylaws and regulations in order to avoid conflicts and
The Health Act establishes public health departments responsible for maintaining the public health of the province; included within their jurisdiction is the control over the installation of septic tank disposal fields as a private means of sewage disposal. In order to obtain municipal approval for a subdivision of lands not served by a municipal sewer system, it must be shown that the lands can be adequately served by a septic system. That determination is made by the local public health department.
Local Services Act
In a few cases, some planning regulations are enforced in rural areas of the province by the provincial government acting under the Local Services Act. Most planning functions in rural areas are carried out by regional districts. Information concerning these regulations is available from the regional district office for the particular area.
The Islands Trust Act
This statute has as its objective the preservation and protection of the unique amenities and environment of the Gulf Islands. In order to simplify and to some extent standardize the planning process for the Gulf Islands, the provincial government assigned many of the planning powers contained in the Local Government Act to a trust committee. These powers had formerly been exercised by seven regional districts. The Islands Trust Council includes general trustees who have authority over the general affairs of all the Gulf Islands, and local trustees who have authority on matters affecting only a particular island. Both zoning and subdivision powers, as well as regional planning powers, fall to the trust committee.
Unless a prior agreement exists between a local government and the Minister of Transportation regarding access to controlled areas, the Transportation Act requires that the approval of the Minister of Transportation be obtained prior to any rezoning of lands located within a radius of 800 metres of an intersection of a controlled access highway with another road.
Environmental Management Act
Many approving officers and municipalities have in recent years established their own particular development approval procedures designed to screen out sites which might have contamination problems. Where these screening procedures identified potentially contaminated sites, the relevant municipality or approving officer would typically refuse to approve the applications until they received some form of assurance from the Ministry of Environment that remediation, if required, had been undertaken satisfactorily. The screening approach has differed from jurisdiction to jurisdiction. The Environmental Management Act is intended to establish a province-wide, uniform development screening process. The new screening process commences when an applicant for development approval provides a site profile to the relevant approving officer or municipality. Approving officers and municipalities are required to receive these site profiles, assess them, and forward them to either the site registry or the manager. The development approval process is then frozen pending certain approvals by the Ministry of Water, Land and Air Protection. An outline of the new procedure (originally introduced as “Bill 26”) is contained in Appendix 1 to this chapter. Heritage Conservation Act. Archaeological and heritage sites are protected by the Heritage Conservation Act, which provides regulatory authority for the protection and alteration of designated heritage and archaeological sites in the province. The B.C. Archaeology Branch will provide information about whether there are any archaeological sites on a property following a formal request. If you have concerns about whether a particular building may have a heritage value, you can inquire with the local government office to see if they have a community heritage register, and if so, whether the building is on the register. Although this doesn’t necessarily mean the property is protected, it is an indication that development of the property may require special considerations. If a local government wishes to permanently protect a building, they may by bylaw designate the property as protected heritage property. The bylaw must then be consulted to determine what can be done to the property. Usually, this will detail any work that would require the owner to first acquire a heritage alteration permit. The Local Government Act sets out severe penalties for illegal alteration or destruction of protected heritage property.
Virtually every parcel of real estate in the province will be affected by a zoning bylaw which places some restriction on the use of that property, the location of buildings on the property, and the form or shape of buildings that are permitted. The fact that a property happens to be used in a particular manner does not necessarily mean that such use is in accordance with the zoning. It is necessary in every case to determine whether the property intended to be sold or purchased does in fact conform to the relevant zoning bylaw.
A zoning bylaw may be amended by a municipal council or regional district by passing a bylaw amending the existing bylaw. A council or regional district may begin the rezoning process on its own initiative or, as is usually the case, upon receiving an application from a property owner.
The process for subdividing land is governed by both the Land Title Act and the Local Government Act. The Land Title Act creates the position of the approving officer who must consent to the subdivision of land; this consent is generally given by signing a subdivision plan prepared for the applicant by a British Columbia land surveyor. In unorganized areas, the approving officer is appointed by the minister of highways, and is generally the district highway engineer. In the municipalities, the approving officer is appointed by the council, and is generally the municipal engineer or planner. In small municipalities where there is no professional planning or engineering staff, the approving officer may be another official such as the municipal clerk.
Taxes on Real Property
The Tax Base: What is Taxed?
The second requirement in establishing a tax structure is to determine the nature of the property which is to be taxed. The two general categories of taxable property in British Columbia are land and improvements.
The definition of land as part of the base to be taxed includes lands covered by water, and quarries and sand and gravel, but excludes coal or other minerals.
In 1990, the government introduced a definition of improvements which was intended to provide more certainty as to what was assessable while at the same time returning certain things to the assessment rolls which had been removed by the Courts. Section 1 of the Assessment Act contains the following definition: “improvements” means any building, fixture, structure or similar thing constructed or placed on or in land, or water over land, or on or in another improvement, but does not include any of the following things unless that thing is a building…
(b)anything intended to be moved as a complete unit in its day to day use;
(c)furniture and equipment that is not affixed for any purpose other than its own stability and that is easily moved by hand.
The Act states factors which the assessor may consider in determining actual value, including:
- present use
- original cost
- replacement cost
- revenue or rental value
- selling price of the land and improvements and comparable land and improvements
- economic and functional obsolescence
- any other circumstances affecting value.
The second important element of any assessment is the property class or classes which the assessor assigns. In classifying property, the assessor considers its use, and whether it satisfies the criteria for the particular class as specified in the regulation. These property classes are set by regulation and, since each class of property may attract a different tax rate, the classification may have a substantial effect on the amount of tax that the property owner is liable for. The regulation prescribes the following classes:
Class 1 – Residential
Class 2 – Utilities
[The section of the regulation defining Class 3 was repealed.]
Class 4 – Major Industry
Class 5 – Light Industry
Class 6 – Business and Other
Class 7 – Managed Forest Land
Class 8 – Recreational/Non Profit Organization
Class 9 – Farm
A property with more than one use might fall into separate classes, and the assessor would divide the property’s value between the classes, resulting in a “split classification”.
The School Tax
for expenditures on education in the school districts throughout the province. The Ministry of Provincial Revenue reports that 30% of the costs of public education have historically been funded by property taxes, 18% from non-residential properties and 12% from residential properties.
Hospital District Tax
Provisions in the Hospital District Act state that the hospital board shall annually, on or before April 20 of each year, notify the member municipalities of the amount of funds which must be raised by taxation for hospital purposes. The member municipalities become responsible for the tax collection, at the tax rate necessary to raise the required funds. In this case, the tax rate is uniform for all member municipalities within each hospital district. The hospital district tax is levied on a slightly smaller tax base than the school tax. The hospital district tax base is narrower, because B.C. Hydro properties are exempt from hospital or general taxes. B.C. Hydro is liable for school tax, however.
Regional District Tax
The regional district tax has a somewhat more complex arrangement. In unorganized areas, the regional district tax base is the same as the hospital district base. In organized areas, i.e. municipalities, the regional government may, by bylaw, elect to use either the same tax base as the hospital tax or the same tax base as the general tax. As with the other taxing functions, the assessments are provided by BC Assessment but the tax rate is levied and collected by the member municipalities or, in the case of unorganized areas, by the provincial government.
Each year BC Assessment and the Municipal Finance Authority apply low tax rates to all taxable properties throughout the province which are sufficient to raise their operating costs (both assessed on the same tax base as the hospital tax). BC Assessment is the authority currently responsible for all real property assessment throughout the province. The Municipal Finance Authority is the authority responsible for issuing debt finance on behalf of municipalities. Their rates of taxation are relatively modest, and the uses of the revenues are specific to the operation of BC Assessment and the Municipal Finance Authority. However, the Municipal Finance Authority may levy a further rate on real property if they do not have sufficient funds to meet payments due on their short term debt.
Two other related taxes are also employed in British Columbia. These are the business tax, based mainly on rental value of real property, and the frontage tax, based on local improvement charges per front foot of real property which benefits from the improvement.
Since 1992, valuation of real property for property taxation purposes has been done annually rather than every two years. A full assessment roll is completed annually using a valuation date of July 1 of that year. The assessment roll must be completed by December 31. The actual value as of July 1, 2003 becomes the tax base for 2004 property taxes; the actual value as of July 1, 2004 becomes the base for 2005; and so on.
Exemption from Taxation
Certain classes of property are granted mandatory, full, or partial exemption from taxation because of their ownership. A partial list includes:
- properties owned by the Crown, both federal and provincial, unless occupied by a non-exempt occupier
- properties owned by municipalities, unless occupied by a non-exempt occupier
- public libraries
- property owned by a board of school trustees or by private schools
- Indian reserve lands
- churches and other public places of worship (only as to the portion of building and land so used)
- non-profit housing for the elderly
- public hospitals
- fruit trees
- farm outbuildings in municipal areas (to a maximum of $50,000 of value per individual parcel for municipal, school, hospital, and other taxes)
- farm outbuildings in unorganized areas (100% exempt from general taxes; to a maximum of $50,000 of value per farm improvement for school, hospital, and other taxes)
- farmer’s dwelling in unorganized areas
- emergency shelters (also exempt from assessment)
- land and improvements used to control or abate pollution in 1996 and continuously thereafter
- university property
- property owned and used by the provincial colleges
- certain B.C. Hydro properties (exempt from general and hospital taxes)
- B.C. Buildings Corporation properties
- B.C. Railway properties
- tourist accommodation to be reduced by the smaller of the following amounts:
a) $150,000 less 15% of the amount by which the assessed value is over $2,000,000; or,
b) 50% of the assessed value.
Home Owner Grants
Since 1957, the provincial government has provided an additional tax relief to owner-occupiers of residential properties. The Home Owner Grant Act states that an owner of an eligible residence, who occupies it as his or her principal residence, is entitled to a grant. At the time of printing (2006) this grant is $570. Where the owner is age 65 or more, permanently physically disabled, or a recipient of war veteran’s allowance, the owner is currently entitled to an additional grant of $275, for a total of $845.1
When a property owner is a Canadian citizen or landed immigrant who has lived in British Columbia for at least one year, and is 60 years of age or over (only one spouse must be 60), or, a widow or widower, or a permanently physically disabled person as defined by Regulation, he or she may make application to defer 100% of the net property taxes payable on his or her principal place of residence. The owner must also have a minimum equity of 25% in their home based on assessed values as determined by BC Assessment. The tax deferral arrangement appears on the title as a registered charge. The taxes so deferred, with interest accruing at the favourable rate of not greater than 2% below the rate at which the province borrows money, are payable on the sale of the taxpayer’s property, or from the proceeds of his or her estate. Effective April 2005 the interest rate was 2.0% and is reviewed every six months by the Minister of Provincial Revenue. The deferral arrangement began in 1974 and the intention of the program is to permit the specified property owners to remain in the family home without the immediate financial burden of real property taxes. Presently, there are approximately 11,000 households deferring their property taxes. For more information on relief programs and property tax issues, please visit the Ministry of Provincial Revenue website at www.rev.gov.bc.ca.
Any person (including a local municipal council, the Minister of Finance and Corporate Relations, a property owner, or an assessor) may, under the Assessment Act, make a complaint against an entry in an assessment roll on the following grounds:
- the name of a person has been wrongfully included in or omitted from the roll;
- a property has been wrongfully included in or omitted from the roll;
- a property has been valued at too high or too low an amount;
- a property has been improperly classified (e.g., as farmland);
- an exemption has been improperly allowed or disallowed
Building Design and Construction
The best building design will be the plan which develops the site to its maximum potential. Observation has shown that a well designed site sustains its value and is less likely to become obsolete as design standards increase or change. Property owners place great importance on the quality of their environment, particularly the visual quality of a site. Preservation of natural features creates a harmonious development ensuring the value potential of the site is realized.
The following are considerations of good site planning:
Siting of the building. The siting of the structure should relate with the design and grouping of the surrounding buildings. Does the siting of the structure blend with the set-backs and other building by-laws?
Visual Aspects. The building should be sited so as to preserve privacy of ground floor residential windows and ensure the overlooking of upper windows is minimized. Natural lighting should not be impaired by other buildings.
Orientation. The siting of the building should take advantage of pleasant views and consider sun, wind, and snow drifting.
Access. Routes for public access should be convenient without creating a nuisance or detracting from the living environment of the site.
Physical Characteristics. Attention should be given to the topography of the site, its drainage, soil, and natural features. These physical characteristics may affect the form and cost of the site development.
The good blending of building and site design is fundamental to good architectural practice. Suitable combined characteristics create and sustain the market value of the property.
The first consideration in judging building design is its suitability to meet present and future space requirements at a marketable price. A building that is built to the specifications of a particular owner may suffer a loss in value because it exhibits particular tastes and requirements. On the other hand, a building plan that is designed to meet the most typical requirements of the market will get the maximum price. A good residential plan will have the layout of the sleeping, working, and living zones arranged in good relationship to one another. These zones are connected with traffic zones which allow passage from one zone to another without passing through a third zone. This traffic zone should be of a minimum area and designed to reduce foot traffic at any one place.
The building site will have a strong influence on the type of building design. Some designs lend themselves better to lots with certain characteristics (e.g., split level homes are well suited to sloping lots). A building design should be in harmony with the neighbourhood style in light of social factors, aesthetic characteristics, climate conditions, and local trends. For up-to-date information on architecture in BC, please visit the Architectural Institute of British Columbia (AIBC) at: www.aibc.ca.
Classification by External Style
There are many variations in external appearance of residential housing. The terms may differ slightly from region to region.
Some of the more easily identified styles are:
Tudor. Today’s tudor styling has evolved from an earlier building method which employed posts and beams structurally, and used plaster or other masonry materials in between the structural members. Contemporary tudor is usually decorative and not structural. Dark stained boards are secured to the building, with stucco used to surface the walls between the boards.
Heritage. Heritage styling is a product of the 1980s drawing its appearance primarily from the best of the pioneer era. Often characterized by large, covered verandas and rooflines reminiscent of barn construction.
West Coast Contemporary. This style is composed of angular roof components and broken rectangular walls. Exteriors are usually preserved or stained wood. Most often associated with the style used in ski resort condominium construction in the 1980s.
Ranch. A ranch style home is usually located on a large lot or acreage because it occupies considerable surface area. It is a one storey building, usually incorporating a garage, under a continuous sloping roof. If a ranch style home has a basement, it is below grade at the front (i.e., not visible because it is under the ground).
Narrow Lot or “Vancouver Special”. Emerging as a style during the 1970s, the Vancouver Special maximizes utility on a narrow site according to city zoning criteria. It is a two-storey structure with a low sloping roof. Usually a balcony is extended on the front of the second storey. One or more self-contained suites are often constructed on the first floor. Craftsman. This is a contemporary interpretation of designs popularized in California in the 1920s and 1930s. It characterised by rustic wood and stone exterior finishes, wider roof overhangs on modestly sloped roofs, wood trim detailing on windows, wide trim boards and brackets on roof overhangs.
Manufactured Home. A manufactured home is defined by Section l of the Manufactured Home Act as a structure which is designed to be moved from one place to another, whether equipped with wheels or not, and to be used as a dwelling house, a business office (unless exempted under the Act), or as any other accommodation. This is an extremely broad category, but transactions involving floating homes, campers, travel trailers, mobiles homes in transit to a destination outside the province, bunkhouses, and manufactured homes used solely for non-residential purposes are exempt from the Act.
Variations on External Style
Some architectural variations may occur in any housing style and terms like bay window, dormer, cathedral entrance, or vaulted ceiling are often encountered in home descriptions.
Bay Window. A bay window is an extension of the floor and walls to increase the size of a room, often without extending the roof. However, it has become increasingly popular to cover the bay area with a separate roof.
Dormer. In one and one half storey buildings it is common to find dormers mounted on roofs. These are mini-roof extensions constructed into the main roof. They are used to provide extra floor area, head room, and light in the upper level.
Cathedral Entrance. This term refers to an entrance area where the ceiling of the entrance is mounted on the underside of the roof, creating a high entrance hall. An A-Frame roof design is often used in this context.
Vaulted Ceiling. A vaulted ceiling is similar to a cathedral entrance in that the ceiling of the rooms follows the roof line of the building and is actually the bottom surface of the roof. This is often encountered in post and beam homes but may occur in other structures.
Classification by Structural Method
Housing styles classified by structural method include:
- Concrete Block (this can be block or total poured in place)
- Post, Beam & Plank (this was most common in 1950s/60s modernist homes)
- Western Platform Wood Frame
The superstructure of a house is built upon the foundation to form the walls, floors, and roof of the building. There are many different structural methods of construction, including post and beam, masonry, and platform framing. Of these, platform framing is the most common residential construction method and will be emphasized in the following discussion.
- Joist: a horizontal framing member used to support a floor.
- Stud: the vertical framing member used to construct walls.
- Beam: laminated, built-up lumber or steel used to support vertical loads in the absence of a vertical wall under the load.
- Column: a solid or built-up post under a beam or point load.
- Header: the supporting structure over an interior opening.
- Lintel: the supporting structure over an exterior opening.
- Truss: an engineered, prefabricated roof or floor support structure.
- Rafter: the structural member that supports the roof deck.
- Ceiling joist: the structural member that supports the ceiling finish.
- Sheathing: the plywood or dimensional lumber that covers the walls under the siding.
- Plate: the horizontal lumber that the studs rest on at the bottom and the top of all framed walls.
- Engineered wood products: include the full range of new wood products — such as wood-I joists, paralam and micro-lam beams and finger jointed studs.
Property Transfer Tax
The Property Transfer Tax Act requires that a land transfer tax be paid by the purchaser or transferee of property. This tax is shown as a debit on the purchaser’s statement of adjustments. The tax is calculated as 1% of the first $200,000 of the fair market value plus 2% of any remainder. A Property Transfer Tax return showing the calculation of the tax payable must accompany each application to register a taxable transaction at a land title office and the tax is payable by the purchaser or transferee at the time of applying to register. The Property Transfer Tax Act also outlines many transactions which are exempt from the tax, including a transfer of a principal residence to certain related individuals, or a transfer between spouses pursuant to a written separation agreement or court order under the Family Relations Act.
In addition, home buyers who are acquiring their first residence and who require mortgage financing of 70% or more of the fair market value of their home may be eligible for an exemption. This First Time Home Buyers’ Program is limited in the Lower Mainland, Fraser Valley and Capital Regional Districts to transactions where the fair market value of the residence is $325,000 or less, and in the rest of the province to transactions where the fair market value of the residence is $265,000 or less.
Conveyancing and Legal Fees
The vendor is responsible for clearing the title of any encumbrances; any fees attached to this process are therefore the responsibility of the vendor. The purchaser is responsible for acquiring title from the vendor and the fees attached to the transfer should be borne by the purchaser. Costs of arranging financing should be charged to the purchaser, unless the terms of the offer specify otherwise. The amount of the conveyancing fees can vary with the circumstances and the value of the property being transferred. Whatever fees are to be paid by the vendor will be shown as a debit to the vendor, thereby reducing the amount of cash due to him or her; the fees to be paid by the purchaser would show as a debit to the purchaser, thereby increasing the amount of the balance due to complete owing from the purchaser.