Canada: Covenants In Respect Of Land: Don’t Be So Negative!

In contract law, a covenant is merely a promise by one party to another. Covenants may be either positive or negative. Negative covenants are often referred to as "restrictive covenants."

In the real estate context, a positive covenant refers to a promise by the owner of a parcel of land to do something (e.g., to pay money) in respect of that land or to use it in a specified way. Positive covenants are personal obligations that are only binding on the parties that agree to them and, at common law, do not "run" with the land owned by the person who made the promise or bind future owners when the land is transferred (unless the transferee expressly assumes the obligation by contract). Common law positive covenants may not be registered as interests in land in the Land Title Office.

A negative or restrictive covenant, on the other hand, is a promise by the owner of land that restricts or prohibits the use of that land in some way. For a restrictive covenant to be valid, it must benefit a parcel of land (known as the "dominant tenement") and restrict the usage of the parcel of land (known as the "servient tenement") against which the covenant is registered. The restriction must "touch and concern" the dominant tenement, a legal requirement that was developed in the 16th century but which, despite its venerable history, remains ill-defined in the case law and is poorly understood. Essentially, in order for a restriction to "touch and concern" the land, it must relate directly to the value, use or enjoyment of the land. The benefit of a restrictive covenant is therefore tied to the servient tenement (rather than the owner of the land personally) and burdens the land, despite any future transfers. Similarly, the benefit of the restriction or prohibition continues to accrue to all future owners of the dominant tenement.

In recent years, the requirement that a covenant be negative or restrictive in order to be registrable and enforceable against the future owner of the servient tenement has been questioned, as there are many circumstances in which the owner of the dominant tenement may have a legitimate objective in requiring the owner of the servient tenement to perform some positive obligation (e.g., to remediate contamination). There have been a number of studies, law reform commission papers and the like recommending that positive covenants be registrable but, to date, there has been no legislative progress on the matter. As a result, for now, common law covenants in respect of land must be negative or restrictive.

The common law requirement that a covenant benefit a dominant tenement (in the vicinity of the servient tenement) would, without legislative intervention, make land use regulation difficult for governmental authorities that wish to impose covenants on landowners but cannot do so at common law due to the requirement for a dominant tenement. The inability to register positive covenants at common law would also inhibit the ability of governmental authorities to further legitimate objectives by obligating present and future owners of land to comply with positive covenants (for example, to build and maintain storm sewer systems).

Section 219 of the Land Title Act (LTA) solves this problem by authorizing a special type of restrictive covenant which, not surprisingly, is referred to in the industry as a "Section 219 Covenant." The LTA expressly provides that a Section 219 Covenant need not be appurtenant to a dominant tenement and that it may contain both positive and negative covenants, all of which will bind future owners of the burdened land.

The LTA provides that a Section 219 Covenant may only contain provisions:

  • in respect of the use of land or of a building on, or to be erected on, the land;
  • that land is to be built on in accordance with the covenant, that land is not to be built on, except in accordance with the covenant, or that land is not to be built on;
  • that land is not to be subdivided, except in accordance with the covenant, or that land is not to be subdivided;
  • that parcels of land designated in the covenant are not to be sold or otherwise transferred separately; or
  • that land or a specific amenity in relation to such land be "protected, preserved, conserved, maintained, enhanced, restored or kept in its natural or existing state in accordance with the covenant and to the extent provided in the covenant." For this purpose, an "amenity" includes any natural, historical, heritage, cultural, scientific, architectural, environmental, wildlife or plant life value relating to the land that is subject to the covenant.

The only persons or entities that may hold Section 219 Covenants are the Crown, a Crown corporation or agency, a municipality, a regional district, the South Coast British Columbia Transportation Authority (i.e., Translink), a local trust committee under the Islands Trust Act or any person designated by the minister. Private persons or entities may apply to the Surveyor General Division of the Land Title and Survey Authority for a ministerial order designating the person as being entitled to hold a Section 219 Covenant. Such a designation is relatively easy to obtain and will generally be granted if there is a legitimate business need for the designation.

In summary, common law restrictive covenants are useful devices for restricting the use of land for the benefit of neighbouring land and are enforceable against future owners of the burdened land. Positive covenants, however, are not enforceable against future owners, unless they expressly assume the obligation to perform the covenants. Section 219 Covenants avoid the difficulties associated with common law covenants in that they may be registered in the absence of a dominant tenement and will be enforceable against future owners of the servient tenement, even if the covenants contained within the Section 219 Covenant are positive in nature.

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.

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