Monday, October 30, 2006
The Extent Of Ownership
When buying and subsequently owning real property, how far does ownership really go? Find out ...
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The Law of real property in North America finds its roots and origin in the Law of England. When the early settlers arrived, they brought along their own version of English Law, that is English Law was applicable so long as local circumstances allowed. Modifications to the original Law were then brought forth by force of adaptation to the life in the new continent, the integration in the new evolving societies of non-English people and, finally, by war and the political events of the time. As a direct and proximate result there have been numerous statutory developments to the Law of Real Property, so that Real Estate Law in North America is substantially different today from that of England in a number of relevant respects.
It is important to distinguish between two types of property, namely a) land and real property and b) personal property. Historically real actions could be taken in the courts in respect of land, and personal actions could be taken in respect of other types of property. Real property consists generally of land and whatever is erected, growing upon or otherwise affixed to the land. This includes also the rights related to the land.
Notwithstanding the common denominator and origin within English Law, however, in Canada - as opposed to the United States - the application of English Law has inherited one of its fundamental concepts: the land itself is not owned. This is so because English Law focused not on ownership of land but, rather, on possession of it. The result is that the land itself is not owned or otherwise subject to ownership. Instead the person who has the right of possession is entitled to exercise certain proprietary rights over the land. The only one thing that is subject to ownership is an "estate" in the land.
An "estate" is an abstract legal concept that can be best characterized as a "bundle of rights". In other words, the owner of an estate has certain rights he can exercise over the land. These rights are limited in nature and are encapsulated at Common Law in the Doctrine of Estates. Estates still in existence today are the Fee Simple Estate, Life Estate and Life Estate Pur Autre Vie.
The holding of a Fee Simple Estate is the largest interest one can have in land. To better understand what this type of ‘ownership' entails, two issues must be considered. First, what rights does a Fee Simple owner have over the ground under his property or the air over his property. Secondly, as the land includes what is ‘affixed' to it, one must determine what constitutes a "fixture".
At Common Law the theory was that one owned his land all the way down to the center of the Earth, as well as all the way up to the heavens. The second concept has been modified, so that one now owns or has rights in the airspace above his property only to the extent that he can make effective use of it. And even this modification is altered by statutes. For example, the Federal Aviation Act (in Canada) and similar statutes in the United States allow an aircraft to pass through the airspace without liability for lawsuits if no physical damage results.
The subsurface rights of a landowner have also been reduced, mainly by Provincial or State governments which have reserved most of the precious minerals, metals, gas and petroleum products for their own use. Specifically as it regards British Columbia, one must trace the title deeds back to the original grants from the Crown (and subsequent legislations and amendments), in order to determine the exact rights in the subsoil. For example, gold and silver were originally reserved in favour of the Crown. Since 1897, however, all base minerals other than coal have been expressly reserved. Coal and petroleum have been reserved since 1899 and gas since 1951. The statutory authorities for making these reservations have now been collected into Section 47 of the Land Title Act Of British Columbia (as amended).
Additionally, since the Crown is the absolute owner of properties in the physical sense, it may expropriate for a wide range of purposes. Usually, any expropriation is accompanied by compensation to persons whose property is taken away, but this is not always the case. For example, under Section 23 of the Land Title Act Of British Columbia the beds under bodies of water were appropriated by the Provincial Government without provision for compensation. Therefore, the Crown reserves to itself many rights, so that one property rights in land can be limited a great deal.
Further limitations can be imposed by municipalities, as in the case of subdivisions. Municipalities have the right to require any person or entity involved into the subdivision of land to provide for and construct streets, sidewalks, sewers, water lines and highways. Of course, this power is not as wide as that retained by the Crown, because the power of municipalities only arises where there is a subdivision of land.
As to determination of what constitutes a "fixture", questions often arise - particularly when land is being bought and sold - as to whether items such as flowers, shrubs, tapestries, wall-to-wall carpeting, chandeliers, television antennae and the likes are fixtures, and therefore part of the real property, or whether they are in fact chattels, and therefore can be removed. This decision determines if an item passes to the new Purchaser or if the Seller can take it when he vacates.
To settle this matter, the courts have established a series of tests to be applied in the circumstances of each case, as follows:
[ ] Items attached to the land only by their own weight are not to be considered part of the land, unless the circumstances show that they were intended to be part of the land.
[ ] Items affixed to the land even slightly are to be considered part of the land, unless the circumstances show that they were intended to be chattels.
[ ] The circumstances necessary to alter the original decision in the two foregoing tests are those which, on inspection, will clearly show the degree to which the item was affixed or attached, as well as the obvious intent for doing so.
[ ] The intention of the person affixing the item to the land is relevant only if it can be presumed from the inspection.
[ ] Even fixtures installed by tenants for the purpose of carrying out their businesses form part of the land. However the tenant has the right, as between himself and the landlord, to turn these items back into chattels by severing them from the land. Therefore, where a property is sold, the tenant's fixtures pass to the Purchaser as part of the land subject to this right of the tenant.
It is clear that the foregoing tests are difficult to apply in any given circumstance. For this reason, it is to everyone's benefit to specify in writing in the Contract Of Purchase And Sale whether or not any items in dispute will pass with the property. By expressly agreeing between themselves, the parties can avoid this Common Law principles and the aggravation that a decision rendered by a court may bring upon one of the contracting parties.
Luigi Frascati
Real Estate Chronicle
