Legal Update: New Legislation Clears Way for Fee-Simple Row Housing
Submitted by Sara E. Pope, Reed Pope LLP Lawyers
The last session of the BC legislature cleared the way for the development of “zero lot-line” or fee-simple “row housing” projects in the province.
A significant amendment to the Land Title Act was passed which allows for the registration of party wall agreements. A party wall is a shared supporting wall in a building or between two buildings that is located along a common property boundary. Before this change to the law, owners sharing a party wall could not register an agreement enforceable against subsequent owners of the party wall requiring them to maintain, repair and replace the wall and to share the costs of carrying out this work. Under our common law, these maintenance and cost-sharing obligations are considered “positive covenants” which do not run with the land and bind successive owners of title.
This limitation has had a chilling effect on the ability of developers to create fee simple row housing projects, as some local governments, and particularly the City of Vancouver, would not approve these kinds of projects because there was no strong legal mechanism in place to ensure the ongoing obligation to repair and maintain the common wall by successive owners of title. With the passage of the new sections to the Land Title Act allowing registered party wall agreements the roadblock has been removed and developers now have another development option in their tool kit. Local government may also wish to consider zoning which permits this alternative housing choice.
Harper Government Takes Further Action to Stregthen Canada’s Housing Market
Department of Finance Canada
As part of the Government’s continuous efforts to strengthen Canada’s housing finance system, the Honourable Jim Flaherty, Minister of Finance, today announced further adjustments to the rules for government-backed insured mortgages.
“Our Government stands behind the efforts of hard-working Canadian families to save by investing in their homes and their future,” said Minister Flaherty. “The adjustments we are making today will help them realize their goals, build on the previous measures we have introduced to keep the housing market strong, and help to ensure households do not become overextended. As just one example, the reductions to the maximum amortization period since 2008 would save a typical Canadian family with a $350,000 mortgage about $150,000 in borrowing costs over the life of that mortgage.”
The Government is announcing four measures for new government-backed insured mortgages with loan-to-value ratios of more than 80%:
- Reduce the maximum amortization period to 25 years from 30 years. This will reduce the total interest payments Canadian families make on their mortgages, helping them build up equity in their homes more quickly and pay off their mortgages sooner. The maximum amortization period was set at 35 years in 2008 and further reduced to 30 years in 2011.
- Lower the maximum amount Canadians can borrow when refinancing to 80 per cent from 85 per cent of the value of their homes. This will pro-mote saving through home ownership and encourage homeowners to prudently manage borrowings against their homes.
- Fix the maximum gross debt service ratio at 39 per cent and the maximum total debt service ratio at 44 per cent. This will better protect Canadi-an households that may be vulnerable to economic shocks or an increase in interest rates.
- Limit the availability of government-backed insured mortgages to homes with a purchase price of less than $1 million.
“Investing in a home is a great way to save,” said Minister Flaherty. “That is the dream that mortgage insurance was intended to support. The measures we are taking today maintain that intended purpose.”
Minister Flaherty said the new rules will take effect on July 9, 2012.