220 Statutory Building Scheme And Letting Scheme

FORMS

Declaration of Building Scheme, Form 35

The director has approved the use of Form 35, Declaration of Building Scheme. The use of Form 35 is compulsory.

Submissions

On the Form 17 Charge, Notation or Filing, select Nature of Interest, Statutory Building Scheme, and attach an image of the original Form 35.

PRACTICE

Statutory Building Schemes

Section 220 of the Land Title Act permits a developer to impose, on two or more lots, restrictions consistent with a general scheme of development. This is accomplished by filing a Declaration of Creation of Building Scheme in the approved form. The approved form is Form 35 and its use is compulsory.

No instrument creating a statutory building scheme in a manner other than provided by s. 220 is registrable. Section 221 of the Land Title Act applies to the statutory building scheme and directs the registrar not to register a statutory building scheme unless the restrictions it purports to create are, in the registrar’s opinion, negative or restrictive. Therefore, the legislative intent is that a statutory building scheme is created using a compulsory form, which admits no deviations, and attached to it is a “Schedule of Restrictions” for the enumeration of the restrictions.

In the past there was a tendency to include in the schedule of restrictions a variety of obligations which are not negative or restrictive in character. It would seem that these provisions are not enforceable and do not run with the land since s. 220 provides that it is only the restrictions that bind and run with the land.

The registrar reviews a statutory building scheme to determine whether restrictions are restrictive or negative. If they are not, the statutory building scheme is not accepted for registration. The registrar does not permit the inclusion of paragraphs in a statutory building scheme that are not restrictions such as liability exclusions, administration schemes, positive covenants (such as an obligation to pay monies), or an ability for a party other than an owner to enforce the statutory building scheme.

Where a restriction provides that, before commencing construction of any building on the land, the owner must submit to the vendor or his nominee a building plan for approval and must adhere to specified design guidelines, this is regarded as a valid restriction. This type of restriction has been given judicial approval and involves a negative contract that no building will be commenced until plans (which adhere to design guidelines) have been submitted and approved.

Modification or Discharge of Registration of Building Scheme

The registrar may accept a modification or discharge of a building scheme in whole or in part, consented to by fewer than all the charge holders under s. 220(6).

CROSS REFERENCES AND OTHER SOURCES OF INFORMATION

“Building Scheme”

See the definition of “building scheme” in s. 1 of the Act.

Power of Supreme Court to Cancel or Modify Statutory Building Schemes

See s. 35 of the Property Law Act regarding the power of the Supreme Court to cancel or modify a statutory building scheme.

Common Law Building Schemes

Before the advent of the statutory building scheme, s. 181 of the Act (Interest or right reserved to transferor) was used to create a regime that had a similar effect. An owner of a number of lots that were usually contiguous could establish a scheme of development containing restrictions of the nature and kind that are now commonly found in statutory building schemes.

On the sale of the first lot within the scheme to a third party, the owner would reserve to itself a schedule of restrictions that would then be registered in the form of a restrictive covenant for the benefit of all of the lots within the scheme. In the first conveyance to the third party, the owner would declare the description of the lots within the scheme and declare that identical restrictions would be reserved for each of them.

The registrar would assign a charge number to the first reservation, which would then appear as a charge in the form of a restrictive covenant on the affected title. In addition, the registrar would record the existence of the scheme as a legal notation on the title of all of the lots within the scheme as follows:

LAND HEREIN WITHIN BUILDING SCHEME, SEE 12345-G

As the original owner alienated each subsequent lot in the development, the reservation in respect of the restrictions on development would be assigned a running serial charge number which in turn would reference the originally assigned number as follows:

23456-G RESTRICTIVE COVENANT (SEE 12345-G)

Continuity of registration was assured by requiring, in the original conveyance, that each transfer of a lot within the scheme would be concluded by a document containing substantially identical terms. This document became known as a “Deed in Common Form” and the first conveyance from the original owner of each lot within the scheme was required to be concluded using that form of transfer. Subsequent transfers of the lots were concluded using conventional conveyance documents and practices.

Some common law building schemes exist today and there may be some “first” conveyances of lots that have not yet occurred. If the transfer of such a lot is encountered, the registrar requires a “Deed in Common Form” to effect the conveyance and records the restrictions reserved to the original owner as a charge in the form of a restrictive covenant.

Secondary Sources

See Di Castri, Registration of Title to Land, vol. 2, paras. 333, 337, 339, and 340.

CASE LAW

General

A building scheme creates obligations among the parties to it over and above those evidenced by each lot owner’s individual contract with the common vendor. Once a building scheme is established, the community of interest necessarily requires and imports reciprocity of obligation. Each lot owner bears the burden of the restrictive covenants that run with their land and at the same time enjoys the benefit of the restrictive covenants that run with the land of all other lot owners (Hemani v. British Pacific Properties Ltd., 1992 CanLII 575 (BC SC), affirmed 1993 CanLII 2300 (BC CA)).

Application

The following principle that a reference to a “lot” in a building scheme includes a “strata lot” continues to apply under the provisions of the Strata Property Act.

The restrictions in a building scheme registered under the Land Title Act bind every part of the land, and the term “lot” used in such a building scheme includes a strata lot created under the Condominium Act, subject to any additional restrictions and obligations contained in that Act (Owners, Strata Plan LMS 44 v. RBY Holdings, [1993 CanLII 2152 (BC SC) (Chambers)]; see also the annotation for this decision under s. 172 of the Strata Property Act).

Interpretation

The owner of a neighbouring lot sought damages against the defendant for breach of a building scheme’s restrictions. The applicable provision in the building scheme restricted buildings in excess of one storey, excluding basements and attics, “and” in excess of 26 feet in height. The neighbouring owner sought to have the provision interpreted disjunctively so that the defendant’s house, which was two storeys but less than 26 feet in height, would be found to be in breach of the restriction. The court found that a reading of the whole provision neither compelled nor required an interpretation of “and” other than in its general conjunctive or cumulative sense. Further, because restrictive covenants that are vague and indefinite will not be enforced, the courts should, to give meaning to and avoid nullifying a covenant, use the usual meaning attributable to that word in the absence of clear reasons to do otherwise. Finally, if there is ambiguity, extrinsic evidence may be considered and, in this case, the fact that other two-storey buildings had been permitted and constructed in the subdivision confirmed that the usual meaning of the word “and” should apply (Muncaster v. Nunnenmacher, 1994 CanLII 2571 (BC SC)).

While building schemes are subject to the same statutory requirements as restrictive covenants, their nature and the manner in which they are to be interpreted differ. A restrictive covenant involves the restricted use of one party’s land for the benefit of another and therefore is to be strictly interpreted. In contrast, a building scheme involves a community of interest; the land covered by the scheme is subject to a “local law” and all owners share similar benefits and burdens on property use. Purchasers acquire the land with knowledge of the restrictions and often because they seek, in return, the benefits that are provided. As a result, the intention of the parties at the time the building scheme was made should be considered, as derived from the words of the document in light of the surrounding circumstances. If, after such a consideration, the building scheme remains ambiguous, then strict interpretation should apply such that any ambiguity is resolved in favour of the free use of property (Gubbels v. Anderson, 1994 CanLII 411 (BC SC), affirmed 1995 CanLII 1377 (BC CA); see also the annotation for this case under s. 35 of the Property Law Act).

A covenant in favour of the municipality was registered under s. 219 of the Act against title to lots in a subdivision. The covenant restricted owners from constructing other than one detached single family dwelling unit on each parcel. The land in the subdivision was zoned for single family residential dwellings at that time. A statutory building scheme was subsequently registered against a number of lots within that subdivision, including the lots owned by the plaintiffs and the defendant. Under the building scheme, lot owners were required to submit plans for their homes to an architect for approval. The defendant made a rezoning application to permit the construction on its lot of a “pension”, defined as a building for tourist accommodation, and the application was approved by the municipality. In granting the plaintiffs’ application for a declaration that the building scheme still applied to the defendant’s lot and prohibited construction of anything other than a single family residential dwelling, the court read the building scheme in the context of its factual matrix and in the context of the time when it was created. In light of the single family zoning in place at that time, the provisions of the s. 219 covenant and the building scheme itself, the court found that the drafters of the scheme sought, through it, to preserve the single family residential character of the affected lots within the subdivision and gave it the interpretation sought by the plaintiffs. Although the scheme did not apply to several other lots in the subdivision, s. 220(3) expressly contemplates a lack of universality in the application of a scheme to all lots within a particular neighbourhood. The defendant could not rely on the exemption of some lots from the building scheme to argue that the scheme did not apply to his lot (417489 B.C. Ltd. v. Scana Holdings Ltd., 1997 CanLII 4401 (BC SC); for subsequent proceedings between the parties, see the annotation for this case under s. 35 of the Property Law Act).

The plaintiffs purchased homes in a residential strata plan. The homes were also subject to a statutory building scheme. The defendants purchased four lots and constructed four large homes for use by members of an exclusive residential resort club. The plaintiffs sought declarations and injunctions, alleging that the defendants had breached the statutory building scheme. The court considered the factual matrix and time within which the building scheme was created and found that the building scheme and the local zoning bylaws did not prohibit the construction of detached single family dwellings to be used as temporary single family dwellings by members of a vacation club. In dismissing the plaintiffs’ application, the court distinguished its decision in 417489 B.C. Ltd. v. Scana Holdings Ltd., because, in that case, the defendant built a tourist pension with guest rooms and a manager’s suite and the construction itself did not meet the requirements of the building scheme. Here, the homes complied with the requirements of the building scheme and the zoning bylaws. They were not constructed in a manner that would allow for their separation or division into separate units; they were not intended for use as anything other than single family dwellings; and there were no separate reception areas, amenity buildings, or other recreational facilities at or near the strata lots (Kornfeld v. Intrawest Corp., 2005 BCSC 1187).

Developer’s Exercise of Authority under Building Scheme

A registered building scheme provided that the developer had authority to waive the restrictions placed upon a subdivision plan. However, as the developer had sold all the subdivision lots and no longer retained a proprietary interest in the subdivision, he had lost his right to exercise such authority. A lot owner, who happened to be the signing authority of the developer, thus had to rely on s. 35 of the Property Law Act in an effort to have her lot exempted from a prohibition of subdivision under the building scheme (High Point Enterprises Ltd. v. Subdivision Plan 47460, 1993 CanLII 1557 (BC SC) (Chambers); see also the annotation for this decision under s. 35 of the Property Law Act).

The respondent, a land developer and the approving authority under a building scheme, rejected the plaintiff’s plan for the construction of a home on one of the remaining lots in the respondent’s subdivision. The respondent objected that the plan was out of character for the subdivision. In rejecting the petitioner’s application to remove the respondent as the approving authority under the building scheme, the court reviewed the respondent’s reasons for refusing the plan and found that the respondent had acted within the rights and powers permitted by the building scheme. In so doing, the respondent had not acted with objective manifest unreasonableness. Further, there was no justification in removing the developer because continuity of development within the parameters of the scheme could be assured to some extent by the presence of the same approving authority throughout the sale of the various lots covered by the scheme (Sullco Inc. v. Cara Glen Estates Ltd., 1999 CanLII 6741 (BC SC)).

The petitioners and respondent M owned adjacent lots 7 and 12 in a residential subdivision that was subject to a statutory building scheme. The subdivision was developed by respondent Columere, which retained power under the building scheme to approve building plans and locations. The petitioners sought an order that they were entitled to locate their home anywhere on Lot 7 provided they complied with minimum setback requirements. When M purchased Lot 12, Columere gave M verbal assurances that the owners of Lot 7 would not be permitted to build on a portion of their lot in a way that would interfere with M’s view. Although M had not secured an undertaking from Columere as to where the owners of Lot 7 would be permitted to build, M then objected to the petitioners’ preferred location on Lot 7. Columere’s power to approve the location of the petitioner’s house is an overriding power that must be exercised for the benefit of all owners and in good faith. The test to be applied is that of “objective manifest reasonableness”. The approval power must not be exercised in a discriminatory manner or for an ulterior or improper purpose not connected to the reasonable objectives of the building scheme. The fact that other documents established minimum setback requirements did not mean that owners were thereby permitted to build anywhere they wish on their property without regard to the building scheme. The power to approve or not approve under the building scheme obviously engages the developer in a balancing act in which building sites that have been approved must be taken into account in approving subsequent applications. Although Columere did not act entirely in good faith when it gave its verbal assurances to M, the petitioners also had a responsibility, if siting at a preferred location was critical in their decision to buy Lot 7, to make inquiries and to receive the necessary approvals before purchasing the lot. As M’s plans were approved first, its siting became a factor affecting the reasonable location of the petitioners’ home. In dismissing the petition, the court found that Columere’s decision as to where the petitioners could construct their home was not manifestly unreasonable (Murphy v. Columere Park Developments Ltd., 2000 BCSC 573).

The plaintiff developed a subdivision subject to a statutory building scheme. The building scheme restricted recreational vehicle parking to rear yards in approved structures or in areas with approved visual screening. The defendants purchased a lot in the subdivision and subsequently obtained a letter from the developer’s agent indicating that the defendants would be allowed to park a recreational vehicle in a side yard or behind their house. Without obtaining any further or more specific approvals for their construction plans, the defendants poured a concrete driveway and parking pad for a recreational vehicle in the side yard between their house and the side-lot line. The court found that the consent letter from the developer’s agent had the effect of supplementing the building scheme so as to allow in principle recreational-vehicle parking in a side yard. However, the letter did not constitute the developer’s approval for the driveway and parking pad that the defendants eventually constructed. To interpret the letter as approval for the driveway and parking pad would be inconsistent with the spirit and intent of the building scheme and would constitute a waiver of the requirements for the developer’s approval of construction plans under the building scheme. Because of the limited space in the defendants’ side yard, visual screening could not be provided in a way that would satisfy the requirements of the building scheme, and the resulting appearance of the defendants’ lot would continue to be inconsistent with the overall aesthetic objectives of the building scheme. On this basis, the court ordered the defendants to remove the driveway and parking pad (Cara Glen Estates v. Mosychuk, 2001 BCSC 761).

The plaintiffs purchased residential homes in phase one of a bare land strata plan. The strata plan was also subject to a statutory building scheme. In accordance with s. 235 of the Strata Property Act, the defendant owner developer advised the plaintiffs and the other phase one owners that it no longer intended to proceed with the development of phase four and that it intended, instead, to develop the phase four lands as a residential club with fractional ownership managed by a commercial hotel chain. In the plaintiffs’ application for declarations and injunctions related to alleged breaches of the building scheme, the court found that the building scheme and its schedule of restrictions were intended to apply to all of the lands within the bare land strata plan including the lands in phase four. However, in tracking the language in s. 220 of the Land Title Act, paragraph 16 of the building scheme expressly reserved for the owner developer the right to exempt any lots which had not been disposed of at the time of an exemption from all or any of the restrictions and benefits of the building scheme. The court rejected the plaintiffs’ submission that the power to exempt in paragraph 16 was limited to allowing the developer to change the proposed phasing, to change the number of lots in each phase, or to elect not to proceed with any particular phase of the development. The court distinguished the plaintiffs’ application from the circumstances in 417489 B.C. Ltd. v. Scana Holdings Ltd., 1997 CanLII 4363 (BC SC) (annotated above) where a restrictive covenant prohibited the construction of anything other than residential dwellings, where zoning permitted only single family uses, and where the building scheme stated specifically that is was the object of the scheme to develop a residential neighbourhood. In upholding the right of the owner developer in this case to exempt the phase four lands from the building scheme, the court held that to do otherwise would be in conflict with the express rights of the owner developer in the disclosure statement and under the provisions of s. 235 of the Strata Property Act. The court dismissed the plaintiffs’ application, concluding that the owner developer had the power to exercise its right to exempt the lands from the building scheme and that it exercised those rights properly in doing that which it specifically advised it might do (Kornfeld v. Intrawest Corp., 2005 BCSC 162). See also the annotation for this decision under s. 235 of the Strata Property Act.

The plaintiff developed a residential subdivision that was subject to a statutory building scheme. The defendants purchased a bare lot in the subdivision from a third party and, contrary to the building scheme, began constructing a home without first obtaining the plaintiff’s approval. The plaintiff applied to court for a declaration that the building scheme remained in good standing and that the defendants had contravened its terms. The defendants applied for summary dismissal of the plaintiff’s application on the ground that the plaintiff no longer owned any of the lots in the subdivision and thus had no standing to apply to enforce the scheme. The court found that the plaintiff’s right under the building scheme to give permission to build was sufficient authority for the court to grant standing even though the plaintiff no longer owned any of the lots. However, as the plaintiff in this case failed to prove damages from the defendants’ breach, the court ordered that each party bear their own costs (Peachland Properties Ltd. v. Wilson, 2006 BCSC 936).

Effect of Subsequent Subdivision

The petitioner’s property was subject to a building scheme that limited development on each lot to a dwelling house. The petitioner’s property comprised a subdivided portion of one of the original lots. The respondents owned the other subdivided portion of the original lot and had built a dwelling on it. The petitioner applied for a declaration that the building scheme posed no obstacle to her in constructing a dwelling on her portion of the original lot. At trial, the court found that the covenant was clear and unambiguous and that it permitted construction of only one dwelling on each of the original lots. The Court of Appeal overturned the trial court decision and found that the building scheme did not preclude subdivision, that the building scheme was ambiguous as to its object or purpose and that, in the absence of a clearly expressed restriction on the use of land, the ambiguity must be resolved in favour of the free use of the land. As the wording in the covenant did not specify only one dwelling house per lot and, in fact, referred to duplex or multi-residence buildings, the court found that, rather than restricting the residential development of the subdivided lots, the object of the scheme was to preclude the commercial use of the property. The petitioner was granted a declaration allowing her to construct a dwelling on her subdivided portion of the original lot (Goodwin v. Ridley, 2006 BCCA 581, overturning 2006 BCSC 351 (Chambers)).

Unregistered Amendments to Building Scheme

The petitioners owned a lot in a recreational community developed by the respondents. The development was subject to restrictive covenants under a registered building scheme. Over the years, the respondents purported to add significant restrictions to the building scheme. The amendments were never registered in the land title office, and they were made without the consent, or perhaps even the knowledge, of the owners for whose benefit they were purportedly created. The court found that the amendments were invalid and unenforceable and that they did not run with the land. Even though the petitioners may have had knowledge of the amendments at the time they purchased their lot, references to the amendments in the contract of purchase and sale between the petitioners and a predecessor in title did not create obligations running with the land. Further, as there was no privity of contract between the petitioners and the respondents or between the petitioners and the other property owners in the community, the petitioners could not be said to be bound by the amendments (Lebeau v. Low, 2002 BCSC 687).

Prohibited Use

The defendants operated a day care from their home in contravention of a building scheme registered against title to their property and the property of the plaintiffs. The building scheme restricted the use of the properties to single family residences. Over a number of years, the day care changed in character from a small after-school care facility to a full-time licensed commercial day care business. Although the plaintiffs had acquiesced to the day care for a number of years, the court found they were now entitled to say “enough is enough”. In granting the plaintiffs’ motion for an order prohibiting the continued operation of the day care business, the court found that the defendants had incrementally contravened the restriction in the building scheme and that it was not unjust or unfair to prohibit the defendants from now doing what they promised not to do when they acquired their property, notwithstanding the plaintiff’s failure to bring earlier enforcement proceedings (Dean Park Estates v. Taylor, 2005 BCSC 729).

Remedies

The defendant breached a restrictive covenant in a building scheme on her property when she commenced construction of a residence without obtaining approval of the building plans from the plaintiffs, the owners of another lot covered by the building scheme. The plaintiffs refused to approve the plans due to the building’s height, which would interfere with their view, and sought a permanent injunction from the court. The court held that it would be inequitable to grant an injunction in favour of the plaintiffs because the plaintiffs had not required formal approval with respect to construction on the other two lots in the building scheme. Furthermore, the defendant had gone to considerable effort and expense to preserve the plaintiffs’ view and the obstruction was minimal (Haines v. Blake, 1991 CanLII 400 (BC SC)).

A strata corporation sought to enjoin the defendants from operating a mortuary and crematorium business on the defendants’ strata lot, which was subject to a statutory building scheme registered against the lot. The building scheme provided that the lot could not be used for purposes other than “manufacturing, processing and storage”. The court granted a declaration under Rule 34 (now Rule 9-4) that the defendants’ use of the strata lot contravened the statutory building scheme. The court granted a permanent injunction enjoining the defendants’ with respect to their business, and refused to grant a stay pending appeal (Strata Plan LMS 44 v. RBY Holdings Ltd., 1993 CanLII 2152 (BC SC) (Chambers), affirmed 1994 CanLII 3007 (BC CA); see also the annotation for this decision under s. 172 of the Strata Property Act).

Where a statutory building scheme contemplates the future subdivision of the lots that are subject to it and the owners of at least some of the lots continue to benefit from the conditions of the building scheme, on an application under s. 35 of the Property Law Act for relief from a restriction on further subdivision, modification of the statutory building scheme to provide the intended relief rather than cancellation of the entire scheme is the appropriate remedy. In these circumstances, modification permits subdivision of some of the lots but also preserves other benefits of the building scheme (Tri-X Timber Corp. v. Rutherford, 2010 BCSC 1001, affirmed 2012 BCCA 71). See also the annotation for this decision under s. 35 of the Property Law Act.

Common Law Building Schemes

The provisions of s. 220 of the Act have no application to a common law building scheme registered under the provisions of the Land Registry Act. That Act contains no provisions regulating building schemes (Sparks v. Registrar of the Vancouver Land Title Office, [1989] B.C.J. No. 1078 (QL) (S.C.)).

A building scheme created by a restrictive covenant registered against the defendant’s land in a subdivision required that he obtain approval for building plans from the original vendor. The common law governed the building scheme, because the Land Registration Act in effect at the time did not provide for its registration. The scheme could not be enforced by the original vendor who no longer owned any lots entitled to benefit from the restrictive covenant. Building schemes were developed to benefit members of a defined community in the absence of municipal regulation of land use. All members of that community are entitled to enforce the scheme, and it is a necessary corollary that only those entitled to benefit from the scheme are entitled to enforce it. The enlargement of a scheme must be a variation of it; thus the owners of lots in a subsequent related subdivision could not claim the benefit of the restrictive covenant on the defendant’s land and the right to enforce it when there had been no consent to the scheme’s extension by the defendant and other lot owners in the original subdivision. The mere fact that the restrictive covenants for each of the subdivisions were identical could not give rise to an inference of common intent by vendor and purchaser. A building scheme must have a defined area known to both the original vendor and the purchaser (Munro v. Jaehrlich, 1994 CanLII 2727 (BC SC); see also the annotation for this decision under s. 25 of the Property Law Act).

The respondent purchased Lot 2 in a 41-lot subdivision that was subject to a common law building scheme established in 1946. At the time, Lot 2 was the only lot that had an existing dwelling on it and its transfer documents were not identical to the transfer documents for the other 40 lots. The transfer documents for Lot 2 required the purchaser to make improvements to the dwelling and to observe all restrictions and conditions in the building scheme should the existing dwelling be demolished or removed. Under the building scheme, only one private dwelling was permitted on each lot. The petitioners brought this action to prevent the respondent from subdividing Lot 2, leaving the existing dwelling on one part of Lot 2 and building a second dwelling on the remainder. The respondent claimed that as long as the existing dwelling remained on Lot 2, he could subdivide Lot 2 in accordance with local government bylaws and requirements. The court disagreed. As the land registration system did not provide for the registration of building schemes, the common law applied to the analysis. The interpretation of a building scheme at common law is based on its wording in the context of the factual matrix and the intention of the parties at the time it was created. In addition, the nature and purpose of the building scheme should not be defeated by a technical interpretation of specific terms or through differences in the wording on the titles of different lots within the scheme. Here, when Lot 2 was first sold, the transfer documents indicated that Lot 2 was part of the building scheme and that the restrictions and conditions of the building scheme applied. There was no basis for the respondent to claim that he was entitled to subdivide Lot 2 as long as the existing dwelling remained in place (Anderson v. Michaels, 2017 BCSC 238, appeal dismissed 2018 BCCA 237).