Standard 9: Ensuring Sound Transactions
The land trust works diligently to see that every land and conservation agreement transaction is legally, ethically and technically sound.
A land trust usually intends to protect the property it conserves in perpetuity. To help secure the perpetual conservation of land, its transactions must hold up over time and withstand challenges. Sound transactions rely on the land trust performing “due diligence” in its transaction steps. Land trust representatives need not be lawyers, but they must have good legal advice, and they should familiarize themselves with basic principles of real estate and tax law. The land trust should draw a landowner’s attention to issues that must be addressed as the transaction proceeds. However, a land trust should not represent itself as giving specific legal or financial advice; a landowner’s own advisors should do that. A land trust may have to call on other financial and technical experts in order to complete the transaction. Carefully documenting the steps a land trust takes in performing its due diligence can help secure the perpetual conservation of the property.
- Property Law Act, RSBC 1996, c. 377, s. 35.
- Land Title Act, RSBC 1996, c. 250, s. 218-223.
- Canada Revenue Agency policy interpretation of Income Tax Act, SC 1985, c. I; see:
- Environmental Management Act, SBC 2003, c. 53, s. 40
- Contaminated Sites Regulation, BC Reg. 375/96, as am., s. 3.
- Land Title Act, RSBC 1996, c. 250, Parts 10 and 10.1
- Canada Revenue Agency policy interpretation of Income Tax Act, SC 1985, c. I;
see Income Tax Technical News No. 26 at:
- Taxation (Rural Area) Act, RSBC 1996, c. 447.
- School Act, RSBC 1996, c. 412.
- Police Act, RSBC 1996, c. 367.
- Property Transfer Tax Act, RSBC 1996, c. 378.
- Social Service Tax Act, RSBC 1996, c. 431.
H. Title Investigation and Subordination
The land trust investigates title to each property for which it intends to acquire title or a conservation agreement to be sure that it is negotiating with the legal owner(s) and to uncover liens, mortgages, mineral or other leases, water rights and/or other encumbrances or matters of record that may affect the transaction. Mortgages, liens and other encumbrances that could result in extinguishment of the conservation agreement or significantly undermine the important conservation values on the property are discharged or properly subordinated to the conservation agreement.
The term title means evidence of ownership—that is, the legal documentation of an owner’s right to the property. Before a land trust commits to acquiring land or conservation agreements, it needs to make sure there are no title problems that could undermine the important conservation values of the property or unacceptably restrict its use. The land trust should search the title of properties as early as possible in the negotiation process in order to prevent problems later on. Land trusts may wish to have landowners sign a letter of intent restricting them from placing new restrictions on title during the negotiation process. A land trust needs to know who owns the property and who has any interest in it; the status of property tax payments; whether there are liens, mortgages or other financial encumbrances; whether there are conservation agreements and rights-of-way; the status of water rights; and whether there are other claims, encumbrances or conditions that impair title. A land trust must evaluate which of these “exceptions” to title will compromise its ability to protect the property and address them accordingly. An encumbrance or interest on title, which is not postponed in the land trust’s favour, may preclude certification of a donated property or conservation agreement as an Ecological Gift.
BC Assessment Questions
- Does the land trust complete a title search, through BC Online or the Land Titles Office, at the start of any land transaction?
- Does the land trust review the land title for the following:
- a. Ownership of the property
- b. Duplicate indefeasible title
- c. Mortgages or other financial charges
- d. Easements or right-of-ways
- e. Inclusion in the Agricultural Land Reserve
- Does the land trust ensure that covenants are given priority over mortgages and other charges on title?
- Does the land trust ensure that mortgages and other financial charges are discharged from the title prior to taking ownership of the property?
- Does the land trust ask landowners to sign a letter of intent restricting them from placing new charges on title during any land transaction with the land trust?
CLTA Assessment Questions
- The land trust ensures that (check all that apply):
- All mortgages are discharged or subordinated prior to acquiring a conservation agreement
- All encumbrances, including liens, conservation agreements and outstanding interests, are throughly analyzed and either removed or a determination made that they will not compromise the land trust’s ablity to protect the land
- All properties and conservation agreements have an adequate legal description