Tips for Preparing and Registering Section 219 Covenants

Section 219 Covenants are without a doubt a very useful part of the local government toolbox in British Columbia. The history and purpose of the Section 219 Covenant is too vast a subject for a brief article such as this one. It is enough to say that a Section 219 Covenant is an agreement between a local government and the owner of land, in which the owner’s rights to use, build on or subdivide the land are limited in furtherance of some public purpose. However, it’s not just the “big picture stuff” that is important. With Section 219 Covenants, as with anything, the devil has an alarming propensity to appear in the details. This article presents a handful of practical tips to help avoid unwanted snags.

Geotechnical Reports – Just Stick to the Script!

Where lands are subject to geotechnical hazards such as flooding, erosion, subsidence, and others, section 56 of the Community Charter permits a building inspector to issue a building permit if a qualified professional certifies that the land may be used safely for the use intended, subject to any conditions the qualified professional may include. It is also a requirement under section 56 that the owner of the land covenant to use the land in accordance with the qualified professional’s report, that the owner covenant to indemnify the local government against liability arising out of the use of the land, and that these covenants be registered against title to the land under section 219 of the Land Title Act.

Most often, the qualified professional’s report is attached to the Section 219 Covenant as a schedule. In order to comply with the requirements of section 56 and, more to the point, in order to ensure that the local government is entitled to protection from liability, it is essential that the report tracks the language of section 56. The report must first of all state clearly what the intended use of the land is, and it must then state that “the land may be used safely for the use intended” if the land is used in accordance with the conditions specified in the report. This is exactly the thing that the qualified professional is required to certify. Accept no substitutes! The same thing goes when an approving officer is requiring a geotechnical report under section 86(1)(d) of the Land Title Act.

To avoid headaches for you and to assist landowners – especially those who may not be familiar with the requirements of the Community Charter or with the nature of geotechnical reports – you might consider offering to review draft reports on an informal basis to ensure they contain the necessary certification language and meet the requirements of section 56, so that any of those deficiencies are identified before the landowner has accepted the report and paid the bill. Of course, you cannot and should not “second guess” the engineer’s opinion as to the safety of the site for the use intended in the context of the perceived hazard.

Avoid Scheduling Nightmares

Although geotechnical reports under section 56 of the Community Charter are specifically intended to be attached as schedules to Section 219 Covenants, the Land Title Office has made it clear in recent years that it will not accept just anything as a schedule to a Section 219 Covenant. The Land Title Office will reject a Section 219 Covenant if it contains a schedule that is vague, unclear, or illegible. To make things more challenging, the Land Title Office also has reservations about accepting Section 219 Covenants that refer to external documents that are not attached as schedules. At times this can present something of a “catch 22” for local governments, but these guidelines will be help you avoid some of the pitfalls.

First, ask yourself whether a schedule is really necessary. Can the salient points of a document be incorporated into the text of the Section 219 Covenant? Except in the case of geotechnical reports, the Land Title Office will reject a Section 219 Covenant that relies on a report attached as a schedule.

Plans, sketches, diagrams and the like can be attached as schedules, but the cardinal rule is that they must be clear and legible. In cases where the plan is simply too large to be reduced to a form that will fit into the document, the plan may be kept on file in a local government office, to be available upon request. The Land Title Office has indicated that in such cases it will accept references to externally stored plans, so long as the reference is to specific filing information.

Bylaws may also be referenced without attaching them as schedules, since they are public documents.

Take Charge and Maintain Control

Section 219 Covenants are often required as pre-conditions of some form of local government approval, notably subdivision approval. It is important that the Section 219 Covenant in such cases be registered against the relevant property before the approval is granted. If registration is overlooked until after approval has been granted, it may be too late. Even if approval can be withdrawn on the basis that it was granted on condition that a Section 219 Covenant be registered, it will be an uphill battle to do so.

It is far better for local governments to maintain control of the process. If approval is the incentive, then approval should not be granted until the Section 219 Covenant is registered. To avoid mistakes, the local government should receive the signed Section 219 Covenant and have its lawyers register it in the Land Title Office. This avoids the possibility that a developer might pressure a local government official into granting approval while the developer delays registration, perhaps indefinitely.

Likewise, if the developer is required to pay the local government’s legal fees in connection with the preparation and registration of the Section 219 Covenant (as is often the case), these should be collected prior to the granting of approval. The alternative may be to chase the developer for an unpaid bill after the fact.

Another reason for maintaining control of the registration process is to ensure that the Section 219 Covenant is registered quickly, once it is signed by all of the parties. Section 219 Covenants often contain one or more priority agreements, by which the holder of a charge on title, typically a mortgage, agrees to subordinate its charge to the Section 219 Covenant. This prevents the Section 219 Covenant from being purged from title in the event of a foreclosure. If an owner refinances between the time a Section 219 Covenant is drafted and the time it is registered, the priority agreement(s) will need to be updated and the process begun again, so the quicker it can be registered, the better.

Can I Get a Witness?

On a final note, don’t forget to make sure the Section 219 Covenant has been signed by all parties, and that all signatures have been properly witnessed by a lawyer, notary, or commissioner for taking affidavits. It is not uncommon for one or more signatures to be inadvertently overlooked, so taking a moment to double-check can save time and expense in the long run. If you are in doubt about how to properly sign a Section 219 Covenant, your lawyer or the Land Title Office can provide you with instructions.