Section 73 of the Land Title Act (British Columbia)
provides, in effect, that unless an approving officer approves, a
person may not lease an unsubdivided piece of a legal parcel of
land for a term of more than three years (leases of portions of a
building are exempt). Prior to International Paper Industries
Ltd. v. Top Line Industries Inc. (1996), 20 B.C.L.R.
(3d) 41 (C.A.), it was generally accepted that the effect of this
restriction was that a lease of part of an unsubdivided parcel of
land did not create an interest in land registrable in the Land
Title Office or enforceable against a third party purchaser, but
did create personal rights enforceable as between the original
parties to the lease. In Top Line, the B.C. Court of
Appeal sent shockwaves through leasing and legal circles by
deciding that a lease granted contrary to s. 73 was void from the
outset and did not create personal rights between the parties to
the lease. The decision jeopardized hundreds, if not thousands, of
existing leases, and required lawyers and industry participants to
develop alternative methods of achieving their goals.
On May 31, 2007, the Legislature addressed the Top Line
problem by amending the Land Title Act to add the
following as a new provision:
73.1(1) A lease or an agreement for lease of part of a parcel of
land is not unenforceable between the parties to the lease or
agreement for lease by reason only that
the lease or agreement for lease does not comply with this
an application for the registration of the lease or agreement
for a lease may
be refused or rejected.
In Idle-O Apartments Inc. v. Charlyn Investments
Ltd. 2008 BCSC 849, the court had the opportunity to consider
the effect of s. 73.1 and, in particular, whether it only operated
to validate future leases or whether it also applied retroactively.
The plaintiff landlord sought a declaration that a 998-year lease
of a part of an unsubdivided parcel executed in 1978 was illegal
and unenforceable because it did not comply with s. 73 of the
Land Title Act. The landlord argued, on the basis of
Top Line, that the lease was void from the outset and did
not confer any personal or proprietary rights on the defendant
After considering the legislative reforms proposed by the B.C.
Law Institute, the explanatory notes to the bill introducing s.
73.1 and the legislative debates (all of which indicated an
intention to override the rule in Top Line), the court
concluded that s. 73.1 should be applied retroactively because it
is remedial legislation passed to bring fairness and equity to
situations like the ones faced by the Idle-O litigants
and, in particular, to address the difficulties caused by Top
Line. The court held that the 1978 lease was a valid lease
between the two parties.
The Idle-O case confirms that a lease of a portion of
an unsubdivided parcel of land may give rise to personal rights
between the original parties to the lease, even if the lease was
entered into before s. 73.1 came into force. This decision may well
serve to validate the many leases entered into contrary to s. 73
that would otherwise have been void on the basis of Top
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Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
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