Keeping it Green Through Covenants and ... - McCarthy Tétrault

Keeping it Green Through
Covenants and Easements
Elizabeth H. Yip
and
Olga Rivkin
An Article published by CLEBC for the course "Real Estate: Everything's Gone Green"
January 29, 2009
McCarthy Tétrault LLP
1300 - 777 Dunsmuir Street
Vancouver, British Columbia
V7Y 1K2
www.mccarthy.ca

Keeping it Green Through Covenants and Easements
I. INTRODUCTION
In this paper, we will explore the tools available to the developer in creating and maintaining a
sustainable development. Land title instruments such as covenants, statutory rights of way and
easements are obviously useful. Community organizations and other entities established by the
developer also have a role to play. We will refer to the example of two large scale master planned
communities – Dockside Green in Victoria and UniverCity in Burnaby.
II.
TYPES OF LAND TITLE INSTRUMENTS
A. Section 219 Covenants
Restrictive covenants registered under section 219 of the Land Title Act are used to impose obligations
or restrictions with respect to the use of land or the buildings erected on the land. Section 219 of the
Land Title Act is reproduced in Schedule A hereto.
1. Purpose
Since a section 219 covenant can be positive or negative in nature, it is extremely flexible and can be
used for many different purposes. The covenant can be comprehensive; for example, in Victoria, the
master development agreement in favour of the City of Victoria (“MDA”) was attached to a section 219
covenant. The covenant can also be specific; for example, at UniverCity, many different, specific
covenants were used.
2. Grantee
The section 219 covenant is usually granted as conditions of subdivision, rezoning or development
approval in favour of the local government where the development is situated, as well as other
government agencies described in section 219(1) of the Land Title Act. In a master planned
development with certain facilities and programs that the developer wants to maintain after the initial
construction, the master developer may want a permanent covenant registered on title independent of
any requirement of the local government.
A restrictive covenant is not registrable under section 221 of the Land Title Act unless:
(1) the obligation that the covenant purports to create is, in the registrar’s opinion,
negative or restrictive; and
(2) a dominant tenement will benefit from the covenant.
Since the obligation in the restrictive covenant must be framed negatively, a restrictive covenant is
more difficult to draft and register than a section 219 covenant. Further, the master developer may
not own any property which may be a suitable dominant tenement after the project is built out and
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Keeping it Green through Covenants and Easements

sold. In this situation, designating an authority to be the grantee under a section 219 covenant, as
permitted under section 219(3)(c), is an option available to the developer. The master developer
makes an application to the Surveyor General, who will grant the designation on terms and conditions
he or she thinks proper. If the application is granted, the master developer can use section 219
covenants as a device to maintain control over any aspect of the development over the long term.
3. Run with the Lands
A section 219 covenant is binding on the covenator and the covenantor’s successors on title.
Therefore, it can be enforceable against successive owners, including persons with whom it has no
privity of contract, over the life of the community.
B. Statutory Rights of Way/Easements
Section 218 of the Land Title Act, which is the legislative authority for statutory rights of way, is
reproduced in Schedule B hereto. Statutory rights of way permit the grantee of the right of way to
access the grantor’s property for the operation or maintenance of the grantee’s undertaking.
In the case of an easement, a dominant tenement, the property which has the benefit of the
easement, is required. Section 218 of the Land Title Act also permits the registration of statutory
rights of way in favour of municipalities and other governmental bodies named in section 218(1)
without the necessity of having a dominant tenement.
Under section 218(1)(d), any person designated by the Surveyor General may also be a grantee of a
statutory right of way. As in section 219 covenants, master developers of communities may take
advantage of this provision to have a specific entity designated to be the grantee under statutory rights
of way.
A master planned community typically consists of many subdivided lots relying on common amenities,
utilities and facilities. A reciprocal easement benefiting and burdening all the subdivided lots gives
each owner the right to access and use common facilities, roads, paths and utilities, as well as allowing
for the maintenance of such amenities. Such an easement typically contains a formula for calculating
the proportionate share of each owner in contributing to the costs in operating and maintaining the
common facilities.
III.
DOCKSIDE GREEN
Dockside Green has been described in the media as the “city of tomorrow”:
Located on a brownfield site, Dockside Green will encompass more
than 20 buildings over 15 acres and three neighbourhoods when
completed. …[T]he community will be a model of sustainability and
aimed for the highest LEED score of any development to date. 1
1 Chris Peterson, Today Construction, “Windmill West: Dockside Green”, January 5, 2009.
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Dockside Green, once completed, will include an on-site waste water treatment plant (the “Sewage
Plant”), a bio-mass plant for heating (the “District Energy System”), a car cooperative, green roofs,
technology enabling its owners and residents to control the level of heat in the suite via Internet, and
other innovative technologies.
A number of “green” measures, such as dedication of trails and conservation of trees, are not unusual
and are often required by local governments in large scale developments. Others are purely
technological, such as the ability to monitor the level of heat in any particular suite via Internet. Some
measures, such as the car cooperative, Sewage Plant and District Energy System, require ongoing
monitoring and operation.
A. The Developer and the Society
Dockside Green is developed by Dockside Green Limited Partnership (“DGLP”). DGLP subdivided the
original lands into a number of different lots. The lots to be used for multi-family residential purpose
will be further stratified. Dockside Green (Victoria) Society (the “Society”) was formed with the
mandate to, inter alia, maintain and operate various common amenities and facilities.
B. The Master Development Agreement
DGLP entered into the MDA with the City of Victoria. The MDA set out the parties’ agreement as to the
manner in which Dockside Green would be developed. Under the MDA, DGLP was obliged to, inter alia:
• comply with design guidelines;
• building to certain LEED standards; and
• construct and provide the Sewage Plant and the District Energy System.
The MDA was registered as a section 219 covenant on title to all of the lands.
C. Site-Wide Instruments
Two site-wide instruments, a reciprocal easement and a statutory right of way in favour of the Society,
were registered on title to establish a regime for the access to and use of common roadways, utilities,
amenities and facilities including the Sewage Plant (collectively, the “DG Common Facilities”) by all
Dockside Green occupants. The Society has the mandate to operate and maintain the DG Common
Facilities as set out in its bylaws. The statutory right of way grants the Society the legal right to access
the lands for such purpose. The easement grants the owners rights to access other owners’ lands to
carry out maintenance in case the Society fails to do so.
A reciprocal easement binding and benefiting all the subdivided lots in Dockside Green was registered
to enable access, use and maintenance of the DG Common Facilities. The intent is that the Society will
maintain and repair the DG Common Facilities, so that the owner of a dominant tenement may not
exercise its rights unless the Society ceases to carry out its responsibilities, and even then, such owner
may not exercise its rights except in respect of works that benefit its lands exclusively.
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A statutory right of way, section 219 covenant and rent charge have been granted in favour of the
Society to operate and maintain the DG Common Facilities. The agreement contains covenants by the
Society to authorize the mini-transit service and car share program and to engage in practices
necessary to support the applicable LEED certification levels in maintaining the DG Common Facilities.
The Society also covenants to prepare an annual budget of the maintenance costs for the DG Common
Facilities and to apportion to each owner its applicable share.
D. Waste Water Treatment Plant
Although responsible for maintaining the Sewage Plant, the Society has contracted with an operator
experienced in designing, building and operating wastewater collection and treatment infrastructure to
carry out this function. Accordingly, the Society entered into an Operation and Maintenance
Agreement (the “O&M Agreement”) with DGLP and Corix Utilities Inc.
Under the O&M Agreement, Corix is responsible for the operation and maintenance of the Sewage
Plant. In the event of an emergency, if it is necessary to use the City of Victoria’s sanitary sewer
system to dispose of sewage and waste water, the Society would be responsible for paying to the City
its disposal rates for such use, unless the emergency is due to negligence by Corix.
E. Bio-Mass Plant
The development includes the District Energy System which provides hot water and heat for residents.
The premise is that rather than burning wood waste, a thermochemical gasification process can be
used to create a synthetic gas that will be burned to produce heat. The resulting products are then
scrubbed, cleaned and burned to produce heat for a heating water boiler, which will supply heat to the
development.
Dockside Green Energy LLP (the “Utility”) was established to design, install, own and operate the
District Energy System. The Utility is regulated under the Utilities Commission Act.
A statutory right of way, section 219 covenant and rent charge will be registered over each subdivision
lot prior to filing of the strata plan. These instruments will be in favour of Dockside Green Power Ltd.
(“DG Power”) to enable DG Power to operate and maintain the District Energy System. Since the
Utility cannot be a grantee because it is a partnership, DG Power shows on the charge as the grantee
instead. The section 219 covenant provides that the owner of the subdivision lot will not do anything
on its lands or buildings which will interfere with or damage the District Energy System. The rent
charge secures the fees and charges payable by the residents which are established by DG Power from
time to time.
F. Car Share Program Agreement
DGLP entered into an agreement with the Society and Victoria Car Share Cooperative (the
“Cooperative”) to create an opportunity for residential and commercial owners to participate in a car
sharing program. The initial ten cars for the program are to be subsidised by DGLP, and if further cars
are required, the Cooperative will be responsible for purchasing them.
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DGLP’s obligations under the agreement terminate on the earlier of the date when all funds required
by DGLP to be paid under the Agreement have been paid, the completion of the construction of
Dockside Green, or 2015.
Following termination of DGLP’s obligations, the Cooperative will conduct its business under common
supervision from the Society, which supervision includes designating parking spots necessary for the
operation of the program, negotiating logos to be placed on the cars, and providing authorizations
necessary for the operation of the Cooperative.
IV.
UNIVERCITY
UniverCity is a large urban community with a projected population of 10,000 residents located on
Burnaby Mountain adjacent to the Simon Fraser University campus. It has received a number of
international awards for its innovation and sustainability.
“Environment” is one of the four Cornerstones of Sustainability on which the community is founded.
A. SFU Community Trust
SFU Community Trust (the “Trust”) is the master developer of UniverCity, a development adjacent to
the Simon Fraser University campus.
B. Covenants and Statutory Rights of Way
Unlike Dockside Green, the Trust did not enter into a single comprehensive development agreement for
UniverCity. Rather, various section 219 covenants and statutory rights of way were granted in favour
of the City of Burnaby. The statutory rights of way set out pedestrian and bicycle pathways.
Covenants at different stages of development and for different purposes were registered:
• Covenants regulating initial construction to protect natural features (i.e., tree
protection and creek setback);
• Covenants dealing with energy efficient infrastructures (i.e., storm water
management); and
• Covenants ensuring that green programs are operated properly (i.e., car share
program).
C. Green Roof
The Cornerstone development features offices and retail units and a mid-rise tower with residential
rental units. An airspace subdivision plan was filed, creating an airspace parcel (the “AP”) which was
further stratified to create title to the residential units, and the remainder (the “Remainder”), which
contains the commercial component of the building.
A landscaped area is located on top of the Remainder and is accessible by the occupants of the AP.
The landscaped area is above the roof of the Remainder.
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To ensure that the owner of the AP has access to the landscaped area for use and enjoyment, and that
the Remainder owner has the ability to repair its roof, the following charges were granted:
• the AP owner granted an easement to the Remainder owner to construct, maintain and
clean the Remainder roof;
• the AP owner granted a restrictive covenant not to damage the Remainder’s roof
membrane located below the landscaped area; and
• an equitable charge was granted by the AP owner in the event the Remainder owner
incurred expenses in repairing or replacing the roof due to damage caused by the
landscaped area.
V. CONCLUSION
In designing the legal framework for a sustainable development, the master developer has certain
options. It can:
• register the instruments;
• have an entity designated to be the grantee of registered instruments;
• rely on contractual obligations; and/or
• create a community association to operate some of the programs.
Regardless of which tools are available to and selected by the master developer, the objective is the
same: creating the green infrastructures and programs and then ensuring that those infrastructures and
programs are maintained and operated. The actual vehicles and instruments depend on the ownership
structure of the lands, the local government where the development is located, the stakeholders
involved and what the market will accept.
The initial construction is within the developer’s control. Having the infrastructure and programs
maintained and operating properly afterwards requires more thought. The developer can minimize
some of the risks by having its own organization carry out such tasks or arrange to have experienced
operators take over the more complicated operations.
The master developer can envision the project and provide the technology and the programs. The
municipality can ensure that appropriate instruments are registered and enforce the covenants if
breached. Ultimately, however, it is the residents who must ensure that what the master developer
envisioned will be maintained for the life of the development.
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SCHEDULE A
REGISTRATION OF COVENANT AS TO USE AND ALIENATION
219 (1) A covenant described in subsection (2) in favour of the Crown, a Crown corporation or
agency, a municipality, a regional district, the South Coast British Columbia Transportation Authority,
or a local trust committee under the Islands Trust Act, as covenantee, may be registered against the
title to the land subject to the covenant and is enforceable against the covenantor and the successors
in title of the covenantor even if the covenant is not annexed to land owned by the covenantee.
(2) A covenant registrable under subsection (1) may be of a negative or positive nature and may
include one or more of the following provisions:
(a)
(b)
(c)
(d)
provisions in respect of
(i) the use of land, or
(ii) the use of a building on or to be erected on land;
that land
(i) is to be built on in accordance with the covenant,
(ii) is not to be built on except in accordance with the covenant, or
(iii) is not to be built on;
that land
(i) is not to be subdivided except in accordance with the covenant, or
(ii) is not to be subdivided;
that parcels of land designated in the covenant and registered under one or more
indefeasible titles are not to be sold or otherwise transferred separately.
(3) A covenant described in subsection (4) in favour of
(a)
(b)
(c)
the Crown or a Crown corporation or agency,
a municipality, a regional district, the South Coast British Columbia Transportation
Authority or a local trust committee under the Islands Trust Act, or
any person designated by the minister on terms and conditions he or she thinks proper,
as covenantee, may be registered against the title to the land subject to the covenant and, subject to
subsections (11) and (12), is enforceable against the covenantor and the successors in title of the
covenantor even if the covenant is not annexed to land owned by the covenantee.
(4) A covenant registrable under subsection (3) may be of a negative or positive nature and may
include one or more of the following provisions:
(a) any of the provisions under subsection (2);
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(b)
that land or a specified amenity in relation to it be protected, preserved, conserved,
maintained, enhanced, restored or kept in its natural or existing state in accordance
with the covenant and to the extent provided in the covenant.
(5) For the purpose of subsection (4) (b), "amenity" includes any natural, historical, heritage,
cultural, scientific, architectural, environmental, wildlife or plant life value relating to the land that is
subject to the covenant.
(6) A covenant registrable under this section may include, as an integral part,
(a)
(b)
an indemnity of the covenantee against any matter agreed to by the covenantor and
covenantee and provision for the just and equitable apportionment of the obligations
under the covenant as between the owners of the land affected, and
a rent charge charging the land affected and payable by the covenantor and the
covenantor’s successors in title.
(7) If an instrument contains a covenant registrable under this section, the covenant is binding on
the covenantor and the covenantor’s successors in title, even though the instrument or other
disposition has not been signed by the covenantee.
(8) No person who enters into a covenant under this section is liable for a breach of the covenant
occurring after the person has ceased to be the owner of the land.
(9) A covenant registrable under this section may be
(a)
(b)
modified by the holder of the charge and the owner of the land charged, or
discharged by the holder of the charge
by an agreement or instrument in writing the execution of which is witnessed or proved in accordance
with this Act.
(9.1) A covenant that was required as a condition of subdivision under section 82 and registered
under this section before the coming into force of the repeal of section 82 may be
(a)
(b)
modified by the approving officer and the owner of the land charged, or
discharged by the approving officer.
(9.2) For the purpose of determining whether to modify or discharge a covenant under
subsection (9.1), an approving officer may exercise the powers provided under section 86 (1) (d),
whether or not the modification or discharge is related to an application for subdivision approval.
(10) The registration of a covenant under this section is not a determination by the registrar of its
enforceability.
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(11) On the death or dissolution of an owner of a covenant registrable under subsection (3) (c), the
covenant ceases to be enforceable by any person, including the Crown, other than
(a)
(b)
another covenantee named in the instrument creating the covenant, or
an assignee of a covenantee if the assignment has been approved in writing by the
minister.
(12) If a covenantee or assignee referred to in subsection (11) is a corporation that has been
dissolved and subsequently restored into existence under an enactment of British Columbia, the
covenant continues to be enforceable by the restored corporation from the date of its restoration.
(13) A recital in a covenant that a person "has been designated by the minister under
section 219 (3) (c) of the Land Title Act", or a statement to that effect in the application to register
the covenant, is sufficient proof to a registrar of that fact.
(14) The minister may delegate to the Surveyor General the minister’s powers under
subsections (3) (c) and (11) (b).
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SCHEDULE B
STATUTORY RIGHT OF WAY
218 (1) A person may and is deemed always to have been able to create, by grant or otherwise
in favour of
(a)
(b)
(c)
(d)
the Crown or a Crown corporation or agency,
a municipality, a regional district, the South Coast British Columbia Transportation
Authority, a local trust committee under the Islands Trust Act or a local improvement
district,
a water users’ community, a public utility, a pulp or timber, mining, railway or
smelting corporation, or a corporation authorized to transport oil or gas, or both oil
and gas, or solids, as defined in the Pipeline Act, or
any other person designated by the minister on terms and conditions that minister
thinks proper,
an easement, without a dominant tenement, to be known as a "statutory right of way" for any purpose
necessary for the operation and maintenance of the grantee’s undertaking, including a right to flood.
(2) To the extent necessary to give effect to subsection (1), the rule requiring an easement to
have a dominant and servient tenement is abrogated.
(2.1) The minister may delegate to the Surveyor General the minister’s powers under subsection (1)
(d).
(3) Registration of an instrument granting or otherwise creating a statutory right of way
(a)
(b)
constitutes a charge on the land in favour of the grantee, and
confers on the grantee the right to use the land charged in accordance with the terms
of the instrument, and the terms, conditions and covenants expressed in the
instrument are binding on and take effect to the benefit of the grantor and grantee
and their successors in title, unless a contrary intention appears.
(4) A person who executes an instrument in which a statutory right of way is created is not liable
for a breach of a covenant in the instrument occurring after the person has ceased to be the owner of
the land.
(5) This section is retroactive in its application and applies to all statutory rights of way, whenever
created.
(6) A recital in a grant or reservation of a statutory right of way that it "is necessary for the
operation and maintenance of the grantee’s undertaking", or a statement to that effect in the
application to register the statutory right of way, is sufficient proof to the registrar of that fact.
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