Leases on Indian Reserves

Transcription

1 CONVEYANCING FOR LEGAL SUPPORT STAFF: ADVANCED ISSUES Leases on Indian Reserves These materials were prepared by Bob C. Starkell of Bob C. Starkell Law Corporation, Vancouver, B.C., for the Continuing Legal Education Society of British Columbia, October Bob C. Starkell

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3 3.1.1 LEASES ON INDIAN RESERVES I. What Is an Indian Reserve?... 2 II. Who Controls the Use of Reserve Land?... 2 III. What Are Surrendered and Designated Lands?... 2 IV. How Can Reserve Land Be Leased to Non-Band Members?... 3 A. Section 28 Lease... 3 B. Certificate of Possession Lease... 3 C. Lease of Designated Land... 3 V. What Is the Indian Land Registry?... 4 VI. What Do Some ILR Documents Look Like?... 4 VII. Where Is the ILR Located?... 5 VIII. How Does the ILR Registration Process Work?... 5 IX. Variations on the Registration Theme... 5 A. Band Involvement in Registration... 5 B. Timing... 5 C. Legal Fees and Costs... 6 D. Multiple Registrations... 6 E. Registrations Involving Status Indians... 6 X. Perspectives... 6 A. The Buyer... 6 B. The Seller... 7 C. The Lender... 7 XI. Appendix A Indian Act Excerpts... 9 XII. Appendix B Parcel Abstract Report XIII. Appendix C Consent to Assignment of Sublease XIV. Appendix D Consent to a Mortgage of Sub-Lease XV. Appendix E Form C Discharge of Mortgage... 41

4 3.1.2 I. What Is an Indian Reserve? The Indian Act says a reserve means a tract of land, the legal title to which is vested in Her Majesty, that has been set apart by Her Majesty for the use and benefit of a band, and... includes designated lands (Indian Act, Definitions, s. 2(1)). In non-legalese, a reserve is a piece of land that is owned by the government of Canada, the use of which has been given to a particular Indian Band. As the law changes and bands take advantage of opportunities to have increasing control and/or ownership of their reserve lands, this simple definition will become less meaningful, but this paper will limit itself to dealing with the traditional concept of a reserve, and leaseholds on such a reserve. II. Who Controls the Use of Reserve Land? The control of the use of land in a reserve belongs to the band members, as expressed through their band council, subject, in some cases to the consent of the Minister. Reserve land can either be used for the general benefit of the band (e.g., a school), or for the benefit of individual band members (e.g., a house). No band member owns any portion of the reserve lands. A band member may be given the exclusive right to possess or occupy a portion of the reserve lands. For this to happen, that band council must allot possession of that land to the band member, and the Minister must approve that allotment. The approval of the Minister is evidenced by the issuance of a Certificate of Possession or a Certificate of Occupation. The government of Canada keeps a register of all Certificates of Possession and Certificates of Occupation (ss. 20 to 28, Indian Act). In general, a Certificate of Possession or Certificate of Occupation does not give the band member any right to grant to a non-band member any rights (e.g., a lease) related to that land (s. 28, Indian Act). Nor, in general, does the band have any right to grant a non-band member any rights related to reserve land (s. 28, Indian Act). However, under s. 28(2) of the Indian Act, the Minister may issue a written permit for a non-band member to have rights over reserve land for up to one year, or with the consent of the band council for a period exceeding one year. III. What Are Surrendered and Designated Lands? Surrendered lands means a reserve or part of a reserve or any interest therein, the legal title to which remains vested in Her Majesty, that has been released or surrendered by the band for whose use and benefit it was set apart (Indian Act, Definitions, s. 2). Designated lands means a tract of land or any interest therein the legal title to which remains vested in Her Majesty and in which the band for whose use and benefit it was set apart as a reserve has, other than absolutely, released or surrendered its rights or interests,... (Indian Act, Definitions, s. 2). In non-legalese, surrendered or designated lands are portions of a reserve to which the band has given up some or all of their rights, although the government of Canada still holds the title. In general, surrendered means that the band has given up all their rights, while designated means that less than all of the band s rights have been given up. An example of designated lands are the developments on the Burrard Inlet Indian Reserve Number 3 in North Vancouver, where the band has given up their right to portions of their reserve lands for 99

5 3.1.3 years to allow that land to be used for leasehold condo developments. Once the band has given up their rights for the 99 year period, the government of Canada, which holds title to the land, can enter into 99 year leases allowing for development of buildings on the land and subleasing of individual suites. IV. How Can Reserve Land Be Leased to Non-Band Members? A. Section 28 Lease The Minister may grant a lease to a non-band member for up to one year. With the consent of the band council, the Minister may grant a lease for more than one year (s. 28(2), Indian Act). This kind of lease can be used where no band member holds a Certificate of Possession over the land. You are not likely to encounter this type of lease in a general conveyancing practice. B. Certificate of Possession Lease Where a band member holds a Certificate of Possession, without the land being designated, and at the request of the band member holding the Certificate of Possession, the Minister may enter into a lease for the benefit of that band member (s. 58(3), Indian Act). There are cases in which residential developments has been done on reserve using this kind of lease. A purchaser of such a lease or lender on such a lease has limited security. The band member s ability to lease depends upon the consent of both the band council and the Minister, and Certificates of Possession can be terminated by the Minister in certain circumstances. C. Lease of Designated Land Where land has been designated, the Minister may enter into a lease of that land for the purpose for which it has been designated. This is the kind of lease of reserve land that you are most likely to encounter in a general conveyancing practice. This kind of lease will normally be registered in the Indian Land Registry. Typically this kind of lease will make provision for assignment of the lease to subsequent owners. It also may have clauses permitting mortgaging of the lease, and granting to lenders rights of notice of default, right to cure default, right to foreclose, to take possession, and to sell. Some allow for tripartite agreements for the protection of a lender. Some have the terms of a tripartite agreement built into the lease. Some have standard clauses built in which are required by CMHC in order to meet their lending requirements. This is the kind of lease most favoured by purchasers and by lenders.

6 3.1.4 V. What Is the Indian Land Registry? The Indian Land Registry (the ILR ) is a registry maintained by the government of Canada to keep track of interests in reserve land. This registry is not a Land Title Office. It does not operate under the Torrens system as the BC provincial Land Title Office does. It includes: land listed by reserve and by band; lists of surrendered and designated land; plans of subdivision of reserve lands; lists of land held under Certificates of Possession and Certificates of Occupation; lists of documents registered against designated land; copies of all registered documents; and a variety of other information. In addition to keeping real copies of all documents registered, the ILR scans almost all documents as they are registered. Much of the contents of the ILR is public information and can be accessed by members of the public. Access is available by contacting the local office of the ILR. You can usually obtain copies of documents in the ILR through your regular land title agent. If you are a frequent user, you may be granted Internet access to certain portions of the registry records and documents. VI. What Do Some ILR Documents Look Like? Some of the documents used in the ILR follow the same format as you would use in the provincial Land Title Office. Others are completely different. Unlike the provincial registry, the registration stamp is usually placed on the back of the last page of the document. Also unlike the provincial registry, most documents must be submitted in quadruplicate original. Some examples are in the appendix attached at the end of this paper: 1. Parcel Abstract This is a title search/state of Title Certificate in the ILR. 2. Assignment of Sublease This is a document used to transfer ownership of a sublease of designated lands. They vary in form and content for various reserves and various developments. The example attached is used for the Burrard Inlet Indian Reserve Number Mortgage In general, the same format is followed as would be used for the provincial registry. One of the main differences is that the standard mortgage terms used must be attached to the Form B. (To save space, the standard terms are not attached to the sample in the appendix.) 4. Discharge of Mortgage Again the same format is used as in the provincial registry. The ILR has a manual, which is available by contacting the registry, which will answer many basic questions about documents and procedures.

7 3.1.5 VII. Where Is the ILR Located? The ILR has regional offices in several locations across Canada. In Vancouver the registry is at 1130 Melville Street, 6 th floor. The registry staff is very helpful if you call with questions. The head office of the registry is in Ottawa. VIII. How Does the ILR Registration Process Work? The regional offices process documents received for registration to ensure that the documents comply in type and content with the requirements for registration. The regional office also affixes the consent of the Minister to the document, once it has been determined that the document is in registrable form. (All documents to be registered must be consented to by the Minister, which is done through the Minister s delegated representative in the regional office.) Once the regional office has processed the document, it is given a pending number in the registry system and an original copy of the document is sent to the head office for final processing. Documents at head office are processed in the order of their pending numbers. At head office, they are reviewed again, given a final registration number, scanned into the registry system, and the registered document is entered on the title of the land in the appropriate reserve. Once the regional office receives confirmation that the head office registration process is complete, the regional office stamps the back of the document and enters the final registration number along with the date. Two original registered copies of the document are then returned to you. In some cases, documents may be submitted directly to the head office, and the full registration procedure happens at head office. IX. Variations on the Registration Theme A. Band Involvement in Registration Some bands do not involve themselves with the registration process and leave it all to the registry. Other bands require you to submit the document to them for approval before submitting it to the registry. In some cases, the band charges a fee for their approval process. A few bands have moved toward greater involvement in the process of managing their reserve lands, including the option to take control of the registration process. In those cases, the band reviews and approves the documents and then submits them to the head office registry for final processing. B. Timing You must ask questions in each case to estimate the time it will take to get your documents registered. It is sometimes not possible to establish the exact length of time registration will take. You may need to be creative in approaching the closing process. Possible solutions include: escrow closings, early submission of documents, title insurance, and changing the completion date. The most important tool is planning ahead.

8 C. Legal Fees and Costs Costs will vary from development to development, reserve to reserve, and band to band. Finding out who to contact and then asking detailed questions is the best solution. It is important to let your client know that there may be some costs that you will not be aware of until you initiate the process of completing the transaction, such as search fees, approval fees, extra couriers, move fees. For example, in the case of the Burrard reserve developments, there are fees to transfer voting shares; in addition, those fees are not the same for all of the developments on the Burrard reserve. It is also important to let your client know as soon as possible that they will be paying a higher fee than for a transfer of a house or a strata lot. There is more time involved on the part of both the lawyer and the legal assistant. Often just the review of the lease documents will take substantial time. Finding out who to call and where to go for information on a specific development or reserve can also be time consuming. Dealing with the issues of timing of completion and possibly an escrow closing can take extra time. There are extra risks involved with dealing with leasehold properties in a non- Torrens system compared to fee simple in the provincial land title office. D. Multiple Registrations There are some developments where the leases are registered in both the ILR and the provincial land registry. In addition to the extra cost, the dual registration requires extra time, and may require different document formats, as the requirements of the provincial registry and the ILR differ, not to mention that the legal description is different in each registry. E. Registrations Involving Status Indians In general, a status Indian cannot give valid or enforceable security over real property located on a reserve. An exception is that where a status Indian owns a lease of designated land, that lease is subject to charge, seizure and execution (s. 89, Indian Act). A. The Buyer X. Perspectives Issues of interest to the buyer: What kind of lease is it? Lease of designated land is best. Who is the landlord? Government of Canada is preferred.. What is the term of the lease? Any rights of renewal? What rent is payable under the lease? Fully prepaid is best. Any rent escalation clause? What financial obligations beside rent will the buyer be taking on? Maintenance? Property taxes? Service fees? Utilities? What limits are there on future assignments of the lease? What limits are there on mortgaging the lease? What insurance requirements are there?

9 3.1.7 What ability will the buyer have to renovate or change the structure on the property or the yards adjoining the structure? What will it cost the buyer to complete the transaction? Is title insurance available? Desirable? What will it cost? Will it be required by the lender? What timing will be required to complete the transaction? What special arrangements may be necessary to meet the agreed completion date? B. The Seller The seller s concerns are fewer: Can the transaction be completed within the time available? At what point will funds be released to the seller? On completion date? Later? Is there a mortgage to be discharged, and what is the procedure to register the discharge? If there will be a delay in releasing funds on completion date, what issues need to be addressed? Bridge financing? Responsibility for cost of bridge financing? Responsibility for seller s mortgage interest from adjustment date to date funds are actually released? What will it cost the seller to complete the transaction? C. The Lender Most of the issues of concern to the buyer are also of interest to the lender, and in addition: What are the lender s rights to foreclose, take possession and sell the lease? What rights does the lender have to notices of default under the lease? What rights to cure defaults? Is a tripartite agreement available? Is it necessary? Are there any unusual rights of the landlord to terminate the lease? What title opinion is available from their lawyer? What property insurance coverage will be available to them as mortgagee?

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11 3.1.9 XI. Appendix A Indian Act Excerpts

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25 XII. Appendix B Parcel Abstract Report

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29 XIII. Appendix C Consent to Assignment of Sublease

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39 XIV. Appendix D Consent to a Mortgage of Sub-Lease

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43 XV. Appendix E Form C Discharge of Mortgage

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