Chapter 1: Evolution of Ownership

Learning Outcomes

describe basic legal concepts and principles that have developed from English law into the present day system of ownership
Identify and explain key ownership terms involving estates in land, concurrent ownership, joint tenancy and tenancy in common
Identify and explain key provisions relating to the distinct status afforded matrimonial homes under the Family Law Act
Discuss various ownership options commonly found in the present Ontario real estate marketplace including condominiums, co-operatives, co-ownership arrangements and partnerships
Describe and distinguish between real estate, real property and personal property
Describe various ownership rights and fractional (lesser) interests encountered in the marketplace with particular emphasis on air, surface and mineral rights, riparian rights, easements and right-of-way
Identify and discuss government as well as prive limitations imposed on landowners with particular emphasis on expropriation and restrictive covenants

HISTORY OF LAND OWNERSHIP

In Canada, two doctrines of law relating to land ownership has arisen: doctrine of tenure and doctrine of estate
For the majority of provinces, the present day system of land holding is rooted in English medieval law
At one time, England colonized Canada therefore statues and common law were established

The Feudal System of Tenure

A system of parcelling land was established under King William who appointed tenants-in-chief who were the principal lords of the realm, but did not own the land, but were tenants of the king. These tenants were allowed to pay with goods and services
This system was one of tenure (holding of the land) subject to some superior right rather than ownership
The type of tenure was related to the duties owed to the landlord, the payment exacted became traditional with each type of tenure

Doctrine of Estates

Estates was connected with the latin word meaning status, was used to convey legal position
lawyers of the time were found to use this term in their reports to describe the interest that a tenant held in his land

Growth of Estates

Growth of estates is tied to common law, which codified rights and restrictions associated with land ownership
Tenure involves holding land without ownership, a right to possess subject to payments
Estate is the status or extent of rights associated with tenure eg the right to pass on tenure from parent to child
Many types of estates have arisen: fee simple, life estate, future estate and leasehold estate

Types of Estates

Estate to uses: flows from trust ownership in which title was in the name of registered owner who may have help title as trustee for the real or beneficial owner, this was to avoid a dower right (spousal rights with regards to land ownership)-disused
Fee Simple: most rights, can use, sell, lease, enter or give away the property (bundle of rights)
Fee Simple with Conditions: fee simple can be created so that it terminates under certain conditions-occurrence of some event eg. property used for a farm
Fee Tail: restricted the inheritability of land to a limited class of heirs, such as the eldest male-no longer valid
Future Estate: normally arise with life estate, since it is not everlasting and a large portion of the fee simple remains when the life estate ends. This portion is called a Reversion when the grantor of the life estate reserves the balance for himself. If the grantor gives the balance to a 3rd party, the remaining portion is called a remainder. The reversion and remainder co-exist as they both have an interest in the property from beginning of the life estate. The remainder cannot use the property so long as the life estate exists, while the life tenant is restricted to what they can do with the property.The life tenant is responsible for the current obligations and has the benefits of the current assets while the ultimate owner has the capital benefit and obligations. If the lift tenant & remainder agree, they can sell the property, tear down, dig up land, because their combined interest form the entire fee simple.
Leasehold Estate: interest in land for a definite period of time, (week, month, years). Tenant is the person to whom the interest is granted and the landlord is grantor of interest
Life Estate:a grantor in a deed or will may grant interest in the lands to someone for a lifetime period & cease on the death of the named individual.

CONCURRENT OWNERSHIP

Arises when 2 or more persons have a right of ownership at the same time: Joint Tenancy & Tenants in Common
Can be disposed of by agreement of the owners-no agreement an application can be made to the courts that leads to a forced sale of the property and distribution of the proceeds

Joint Tenancy:

involves ownership by 2 or more persons whereby, on the death of one, the surviving tenant acquires the whole interest in the property
Creation: In JT all owners have the same size of interest, the same possession and the same title to the land
Four Unities: 1) Title: All JT must derive their title from the same instrument eg. deed or will, 2) Time: % of each JT must begin at the same time, 3) Possession: each JT is entitled to undivided possession of the whole of the property and none holds any part separately to the exclusion of the others. 4) Interest: The % of each JT must be identical in nature, extent and duration. -if any of the 4 unities are missing during JT, then the owners will become tenant in common.
Survivorship-important aspect to JT in that the % of the deceased tenant is automatically transferred to the surviving tenant.
Spousal Interest: Under provincial legislation, if a married person dies owning an interest in a matrimonial home jointly with someone other than his/her surviving spouse, then joint tenancy is deemed to be severed immediately before the time of death. The % becomes tenant in common and provides a basis for the appropriate spousal interest in the assets of the deceased spouse's estate
Termination: if JT sever their JT relationship, they automatically become tenants in common-this process is called severance ie marriage separation

Tenants in Common:

Ownership of land by 2 or more persons; unlike JT tenancy in that % of deceased does not pass to the survivor, but is treated as an asset of the deceased's estate
TinC only has one unity, possession where each tenant has the same rights over the property and use of the whole property
TinC may hold different % and acquire these % in different ways
No survivorship exists as the tenants hold separate interest
Each tenant may sell or lease h/h undivided interest to another or dispose of it by a will
Selling the % will dissolve the TinC

MATRIMONIAL HOME

The Family Law Act recognizes the concept of an equal partnership-marriage relationship and provides a code for the orderly and equitable settlement of the spouse's affairs when a marriage breaks down, or when a spouse dies, by an equalizing of the net family properties

Family Law Act

Part 1 of the Family Law Act deals with equal division of property on the marriage breakdown or death with stated exclusions (property inherited or received as a gift)
Part 2 deals with the rights of the non-owner spouse to equal possession of the matrimonial home and sets out rights of possession of that home, the designation of a MH and limitations on ability to encumber or dispose of MH
Designation-of a MH means that the property is deemed to be the family residence at the time of designation
Family Property-property acquired during the marriage is equally divided between the spouses, subject to the provisions of any valid domestic contract signed by the spouses and subject to any court order

OWNERSHIP ALTERNATIVES

Condominium:

differing estate interests -JT for units & TinC for other common areas

Legal Structure: Declaration (Constitution of the Corporation) & Description (Diagrammatic Presentation of Property

Co-Operatives

property is owned by a corporation and members have a lease for a specific housing unit and may be permitted to acquire a share in the corporation (equity co-op)
co-ops provide a high level of security of tenure, not typically found in rentals & affordable housing
Members pay a monthly housing charge to cover the mortgage and operating costs
Co-op, as member-controlled organization is managed by a board of directors consisting of elected persons from the membership
EQUITY CO-OPERATIVE (WITH SHARED CAPITAL): involves a corporation that owns the land and buildings with members as shareholders in the corporation. Ownership is by share certificate in combination with an occupancy agreement relating to a specific unit. An individual holds shares in the corporation.
NON-PROFIT CO-OPERATIVE (WITHOUT SHARE CAPITAL): has the primary objective of providing housing for its members without the purpose of gain for those members

Co-Ownership

when 2 or more persons own property jointly eg owning a family home, 4 family members owning a recreational property etc
Deed-represents the proportionate % held in the building in relation to other tenant in common owners but does not relate to a specific unit within that structure

Partnership

a contractual relationship between 2 or more parties, typically evidenced by a partnership agreement.
A partnership is personal and all assets acquired within the partnership cannot be disposed of without expressed consent of the partners
Limited Partnership: investment arrangement that limits a partners liability to the amount invested while also limiting the profit h/s can make. Must be registered and have one general partner, whose liability is not restricted. The LP enters into an agreement whereby their liability is restricted to individual capital investment. LP must be passive investors and turn over the management and general operation of the project to the general partner.

SCOPE OF OWNERSHIP

Real Estate vs Real Property

Real Estate-refers to tangible aspects of property while Real Property includes both tangible (land and improvements) and intangible (rights). Property is viewed as real or personal. Real property is immovable while personal property is movable (chattels).
Generally, all property except land and the improvements thereon are considered to be personal property
Personal Property includes: refrigerators, stoves, drapes, furniture-chattel
Fixtures are typically included as they are attached to the property. If it is not the intention, those items must be excluded in the offer

Rights and Fractional (Lesser) Interests

Property rights are commonly referred to as the bundle of rights and each right represents a separate and distinct privilege of ownership ie right to sell

Air Rights -use space above the physical surface of land-building bridge, skyscraper, multi-level building
Surface Rights-ground level rights involves the right to use or alter the surface of real property
Mineral Rights-right to enter or use lands for the purpose of removing minerals located within. eg extracting oil and gas, gold, silver and precious metal
Riparian Rights-owners of land bordering shore of a navigable lake may have certain rights-access to water
Easement-a right enjoyed by one tenement over another tenement (ie one land owner with a right over another land owner, for special purpose. Dominant tenement-the estate that derives benefits from a servient tenement, as in a right of way. Servient Tenement-land over which an easement exists in favor of the dominant tenement. eg Party wall, encroachment, right of way for pedestrians or cars, utility agreement right to place and maintain utility lines, pipes and equipment. Creating and Easement: Express Grant by owner, Prescription:adverse possession (right of way), Implication: shared docks and Statute: statutue groups including public utilities. Terminating an Easement: Merge, Release, Ceasing of Purpose (purpose disappears). Profit a Prendre-enter property based on a written agreement and take something from it.

OWNERSHIP LIMITATIONS

government limitations exist and can be grouped under 4 categories: 1) Right to regulate (police powers) 2) Right to Levy taxes 3) Right to take private property (expropriation) 4) Right to have ownership returned if no heir can be found (escheat)

Expropriation

involves taking of private property by the state for public use, with fair compensation to the owner, through the exercise of the right of eminent domain. Eminent domain is created through legal action and decides the price or compensation to be paid.

Escheat

is the reversion of property to the state or some agency of the state in the event that the owner dies intestate (leaving no will) and having no legally qualified heir to whom the property may pass by lawful descent

Restrictive Covenants

a limitation placed upon the use of property, contained in the deed ie developer may restrict the type of homes to be built, a condominium declaration may dictate whether satellite dishes can be placed on a unit exterior walls etc. In recent years, deed restricted subdivisions have become common for uniformity and defined standards beyond municipally enforced zoning by laws.

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Section 1 contains 3 chapters

Section 1: Property Ownership