Canadian Business and the Law
Chapter 19 – Real Property
Ownership
Real Property – Land or real estate, including buildings, fixtures, and the associated legal
rights.
When people own real property, this includes as written in law, “the earth beneath and
the air above.” In practice, this law is limited by legal rules like air travel.
Fixtures – Tangible personal property that is attached to land. Buildings, or other fixtures.
This includes heating ducts, lights and plumbing for example.
Value of land results from two key attributes. First, land is permanent and immovable.
Second, the total quantity is finite.
Real property governed by common law
Interest in Land
o Fee Simple – The legal interest in real property that is closest to full ownership
o Ownership of land easily divisible
o Division of Ownership
As co-owners they would have an undivided interest in the entire building.
Each owns a portion of the whole, but their respective shares cannot be
singled out or identified in any distinct way
A tenant generally refers to someone who leases space rather than owns it
outright; however, the legal use of the word “tenant” is much broader and
includes someone who has any kind of right or title in land.
Tenancy in Common – co-ownership whereby each owner of an undivided
interest can dispose of that interest.
Joint tenancy – Co-ownership whereby the survivor inherits the undivided
interest of the deceased.
o Division of ownership in time
Leasing land is an example of division of ownership in time.
Limits on Ownership
o Restrictions on land imposed by statute and common law, include
Municipal governments have the authority to control land use through
planning schemes and zoning regulations
Environmental regulations like discharge of harmful substances
Common law of nuisance limits any use of land that unduly interferes with
other owners’ enjoyment of their land
Family law may designate property as matrimonial – to be shared by both
spouses – even though under one name Many government agencies have authority to expropriate land for
particular purposes
Ownership of land in a foreign country can be limited by that country’s
governmental policy
o Other limits by contract
Grant an adjoining landowner the right to use a portion of his land for a
particular purpose.
Easement – the right to use the land of another for a particular purpose
only.
Grant lease to a tenant
Grant oil, gas, or mineral lease
Grant mortgage on the land as security for a loan
Restrictive covenant – a restriction on the use of land as specified in the
title document
Registration of ownership
o Two types:
o A registry system – Eastern Provinces
Registry System – The system of land registration where by the records
are available to be examined and evaluated by interested parties.
Public has access to records and can examine or search the records to
evaluate the state of ownership of a particular piece of land. This process
is known as “searching the title.”
Paralegal – one who performs legal work under the supervision of a
practicing lawyer
o The Land titles system – Western provinces
Land titles system – The system of land registration whereby the
administrators guarantee the title to land
Acquisition of Ownership
The Purchasing Transaction
o Buying land is buyer beware situation expressed in law as caveat emptor – it is up
to the buyer to investigate and evaluate the property both in financial and legal
terms
o Seller must not mislead the buyer, but is generally under no obligation to disclose
information about the property
Participants in the transaction
o Main participants are the buyer and seller
o Real estate agents, property appraiser, land surveyor, engineer, lawyer, consultant
can also be involved
Stages in the Transaction o Agreement of purchase and sale
Normal elements include provision for buyer to conduct full investigation
of property, bring matters of concern to seller, time for buyer to arrange its
financing, and a specific date for the conclusion of the transaction
The premise names of the parties, precise identification and description of
the property, purchase price, deposit, and payment method, statement of
any conditions, list and description of exactly what is included in the price,
date for closing and what each party must deliver on that date, who is
responsible for waht during the period between signing and closing,
warranties
o Investigation by the buyer and the seller’s response to any problems the buyer
may raise
o Title search- investigation of the registered ownership of land in a registry system
o Legal claims against the seller- search should establish what legal claims exist
against the seller of the property
o Verification of Boundaries- confirm boundaries described in title fit the physical
boundaries of the land
o Physical examination- confirms that the property is in the state it is expecting
o Environmental audit- ensures that there are no lingering or hidden environmental
hazards
o Taxes- all municipal property taxes and any other local charges related to the
property are paid up to date
o Local bylaws- verify that the property can be used for its desired purpose
o Closing – final stage of a real estate transaction when final d
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