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In This Volume

  • 38 (1) If a reversion expectant on a lease is surrendered or merged, the interest which as against the lessee confers the next vested right to the land is deemed the reversion for the purposes of preserving the same incidents and obligations as would have affected the original reversion had it not been surrendered or merged.
  • (2) This section applies to surrenders or mergers effected before or after this Act comes into force.



Preservation of Incidents of Subleases

Section 38 preserves incidents of subleases that would otherwise be destroyed by surrender or merger of a headlease. When discharging a head lease, the registrar also amends the notation for the sublease to read “formerly sublease of Lease # _____, see s. 38 of the Property Law Act”.


Secondary Sources

See the following for further information:

  • Di Castri, Registration of Title to Land, vol. 2, para. 392
  • Megarry and Wade, The Law of Real Property, 5th ed. (Canada Law Book, 1985), pp. 684 to 686



A tenant granted the appellant credit union a debenture over the tenant’s interest in a lease. Following the tenant’s default and assignment in bankruptcy, the respondent landlord argued that if, as the court confirmed, the debenture operated as a sublease, then the credit union became liable to pay rent when the trustee in bankruptcy relinquished or disclaimed any interest in the tenant’s assets such that the entire tenancy became vested in the credit union by operation of s. 38. While s. 38 entitled the credit union to take the position of tenant or lessee under the lease, that entitlement did not impose upon it liability to pay rent. The credit union in fact did not pay rent, nor did it exercise any right to which it might have been entitled as a lessee. Accordingly, it was under no obligation to the landlord (Mavrikos v. Island Savings Credit Union, 1991 CanLII 1149 (BC CA)).