A complicating factor in the recent push to increase available housing in British Columbia are historical restrictive covenants that are registered on title to the properties that are the subject of proposed developments. These restrictive covenants are sometimes overlooked in the course of owners and developers purchasing properties for development, which can result in disputes before breaking ground on a development.
The landscape that has brought restrictive covenants to the forefront are Bills 441 and 472, which were introduced by the provincial government in 2023 to facilitate the creation of more homes in British Columbia. The new regime mandates that local governments update their zoning regulations to allow for "small-scale multi-unit housing" by June 30, 2024. This is a type of housing that maintains the ground-oriented design of single-family homes, while accommodating more units. Examples of these are secondary suites, duplexes and laneway homes (rather than larger condo towers or apartment complexes).
What is a restrictive covenant?
A restrictive covenant or building scheme is a legal agreement between landowners that limits how a property owner can use their land. Often it will impose specific conditions, such as prohibiting certain types of buildings or land uses or requiring the maintenance of aesthetic standards. Covenants are commonly used in residential neighborhoods to maintain property values and the character of the area. These covenants are attached to the land and continue to apply to new purchasers of a relevant property. Violating a restrictive covenant can lead to legal action from other property owners or the original developer of the property.
Recently, restrictive covenants in British Columbia have come into the public spotlight because common restrictions, for example, allowing only single-family use or imposing limits on density, prevent the replacement of single-family homes with multi-unit dwellings. To date, the government's position has been that existing covenants are not superseded by the newly introduced housing regimes.
Often, these covenants cannot be removed without consent of the other owners or without the permission of the original builder, who in many cases may no longer be in business. This issue is becoming increasingly prevalent in new commercial developments and infill projects on older properties, where historic covenants continue to pose obstacles to potential buyers and developers.
The flip side of this is that existing homeowners who want to preserve the aesthetic and character of their neighbourhoods are being faced with requests or even legal action seeking to remove or modify restrictive covenants. Also, restrictive covenants may contain other prohibitions raising legal questions about whether working from home or running home-based businesses is permitted.
The unfortunate reality is that these situations often lead to disputes within neighbourhoods about whether the existing restrictive covenants should be retained, modified or cancelled.
Modifying or removing restrictive covenants
Section 35 of the British Columbia Property Law Act provides a mechanism for removing or modifying restrictive covenants on land.3 This section allows individuals to apply to the British Columbia Supreme Court to modify or cancel past restrictive covenants. Grounds to modify or cancel include where the reasonable use of the land is impeded without providing practical benefits to others or when changes in the character of the land, the neighbourhood or other relevant circumstances render the restrictive covenant obsolete.
While section 35 offers a potential way to alter or cancel a restrictive covenant that no longer serves its purpose, meeting the criteria for modification or cancellation can be difficult. Moreover, all other owners who are affected are required to be given notice and are entitled to support, oppose or take no position in the court process. Some advocates are urging the Province to enact laws that address outdated historical restrictive covenants more universally to avoid the need for owners to apply to the court on an individual basis. The Province has yet to make legislative changes in response these calls.
If you are navigating the impacts of a restrictive covenant in your neighbourhood, we encourage you to seek legal advice to explore your rights and options.
Key takeaways
Historical restrictive covenants and statutory building schemes can significantly limit what homeowners and commercial developers can do with their properties. It is crucial to conduct thorough due diligence when purchasing property to ensure you are aware of existing restrictive covenants that may affect your proposed use of the property.
Footnotes
1 Bill 44, Housing Statutes (Residential Development) Amendment Act, 2023.
2 Bill 47, Housing Statutes (Transit-Oriented Areas) Amendment Act, 2023.
3 https://www.bclaws.gov.bc.ca/civix/document/id/complete/statreg/96377_01#section35
About Dentons
Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Specific Questions relating to this article should be addressed directly to the author.
