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Rights and registration

Rights

What types of holding right over real estate are acknowledged by law in your jurisdiction?

Real property generally falls within provincial or territorial (rather than federal) jurisdiction. Thus, the types of holding rights over real estate acknowledged by law in Canada differ across the country. Each jurisdiction has enacted statutes that govern the acquisition, ownership, use, financing and development of real estate.

In the common law provinces and territories, a freehold estate in real property is a right or interest for an indefinite duration, whereas a leasehold estate is for a duration which is fixed or capable of being fixed in time. A fee simple estate is the most common freehold estate in Canada and, for all intents and purposes, is equivalent to absolute ownership of real property. A leasehold estate is not absolute but does give the tenant an exclusive right of possession enforceable against everyone, including the owner of the freehold estate. Other rights over real estate frequently encountered in the common law jurisdictions include:

  • easements (ie, non-possessory rights to use a portion of real property for a specified purpose);
  • profits a prendre (ie, non-possessory rights to take natural resources from real property); and
  • restrictive covenants (ie, agreements not to use real property for a specified purpose).

All of these constitute rights in land. Licences to use land are purely contractual.

In Quebec – the only civil law province in Canada where real estate is generally governed by the Civil Code of Quebec – the law distinguishes between personal rights (ie, rights enforceable against a person) and real rights (ie, rights in property). Real rights include rights of ownership, rights in a thing belonging to someone else and rights in the form of a claim over another’s property. Some real rights are perpetual (eg, the right of ownership); some may be perpetual or temporary (eg, superficies and servitudes); and others are always temporary (eg, emphyteusis).

Are rights to land and buildings on the land legally separable?

In Canada, rights to land and buildings on land are legally separable; however, such separation is the exception and buildings are generally considered to be part of the land on which they are built.

In common law jurisdictions, parties under a lease can agree that the tenant owns or has an exclusive right to possess the building, notwithstanding that the landlord continues to own and may even have a contractual right to use the underlying lands. Another way in which land and buildings are legally separable is through strata title ownership, whereby, for instance in the context of a condominium, the land and buildings are separated into levels and the levels into common elements and units.

In Quebec, ownership of buildings can similarly be separated from ownership of land by creating superficies in one of three ways:

  • by the subsoil owner’s renunciation of the benefit of accession;
  • by the transfer of the right of accession; or
  • by the division of the object of ownership.

By contrast, emphyteusis does not separate ownership of buildings from ownership of land in Quebec, but it does result in the emphyteutic lessee having the full enjoyment of land for a term, provided that it makes constructions, works and plantations that increase the land’s value, while the emphyteutic lessor retains ownership of the improved lands on termination. Similarly to strata title in the common law provinces, ownership of land may also be separated from ownership of a building through the regime of divided co-ownership.

Which parties may hold and exercise rights over real estate? Are there restrictions on foreign ownership of property?

Legal and natural persons may generally hold and exercise rights over real estate in Canada, provided that natural persons:

  • are of the age of majority;
  • do not lack mental capacity; and
  • are not undischarged bankrupts unless they otherwise have adequate legal representation.

Non-residents may generally hold and exercise rights over real estate in the same manner as residents of Canada. However, certain restrictions on foreign ownership of real property apply at both the federal and provincial level (see the “Investment” section below).

How are rights, encumbrances and other interests over real estate prioritised?

As a general principle, rights, encumbrances and other interests over real estate are prioritised according to their order of registration subject to, among other things:

  • unregistered rights, encumbrances and other interests of which there is actual notice at the time of registration;
  • depending on the jurisdiction, rights arising by prescription;
  • rights of creditors under bankruptcy, personal property and construction lien laws;
  • contractual rights of priority; and 
  • statutory rights and charges in favour of certain governmental and quasi-governmental entities, all of which can in some circumstances defeat the priority of a registered right, encumbrance or interest over real estate gained by reason of its registration.

Registration

Must real estate rights, interests and transactions be registered in your jurisdiction? What are the legal effects of registration?

In general, rights, interests and transactions related to real estate need not be registered in Canada; however, registration has the legal effect of:

  • recording titles in an orderly manner;
  • giving the public notice of interests claimed in land;
  • rendering rights opposable to third parties; and
  • establishing priority between claimants.

What are the procedural and documentary requirements for entry into the national real estate register(s)? Can registration be completed electronically?

Two types of land registration system are used in Canada:

  • the older registry system, which is a public record of instruments affecting land without any guarantee of title; and
  • the land titles system, which is operated by the government and effectively guarantees title, subject to certain statutory limitations.

Each province and territory uses either one or a combination of both of these systems, with most common law jurisdictions having converted or being in the process of converting to the land titles system. Jurisdictions still in the conversion process include Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario and Prince Edward Island.

The procedural and documentary requirements for registration of instruments affecting land differ across the various provinces and territories. Instruments submitted for registration must adhere to the applicable statutory and regulatory requirements regarding procedure, format and content. Electronic registration of instruments affecting land is available in certain jurisdictions across the country.

What information is recorded in the national real estate register(s) and to what extent is such information publicly available?

The register for a specific property generally records the legal owner, the legal description and civic address, and the legal interests or encumbrances registered against title. This information is available to the public to the extent that it has been registered. However, rights, interests and transactions related to real estate do not generally need to be registered in Canada. In the context of real estate transactions, off-title inquiries should be sent to various government authorities, and representations and warranties should be made by owners in order to gain comfort in respect of real property rights not requiring registration.

Is there a state guarantee of title?

There is a government guarantee of title for properties registered under the land titles system. The register or certificate of title produced for these properties may be relied on as constituting the true status of title, subject to certain prescribed statutory exceptions. Where a person is wrongfully deprived of an interest or estate in property by virtue of fraud or an error or omission on the register or certificate, he or she may apply for limited compensation or damages from a government-administered assurance fund.

There is no government guarantee of title for properties registered under the registry system. Under the registry system, quality of title is determined by the person searching the file.

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