Commercial Litigation and Dispute Resolution Blog

It seemed like a good idea at the time. However, as time passes, things change and having a restrictive covenant on title to property can become a big problem. Restrictive covenants are charges registered on title to land that restrict the use and enjoyment of that land in some way.  They can prohibit activities on a property or confine the nature, size and location of construction on the property.  Restrictive covenants are placed against title to a property for the benefit of one or more other properties (and the owners of those parcels). They can be very simple.  For example, a restrictive covenant may prevent building a home above a certain height so the view from a neighbouring property is preserved. Restrictive covenants can also be far more complex and registered against a large number of properties. For example, a restrictive covenant can be on title to dozens of parcels and regulate and restrict all manner of conduct and construction on them all.

One of the difficulties is how to amend or get rid of a restrictive covenant when it is no longer of use. If the parties for whose benefit the covenant was registered agree, then it can be quite simple. However, if they do not, what can be done to rid a property of a restrictive covenant that restricts its use, prevents its development or depresses its market value?

The short answer is that you can apply to the courts for an order that the restrictive covenant be amended or removed for title to your property. The authority for this application is section 35 of the Property Law Act. This section allows the court to modify or cancel several different types of charges against land (i.e. restrictive covenants, statutory rights of way, building schemes, land use contracts) in appropriate circumstances, even over the objections of other interested parties. The court can order cancellation for several different reasons. Those include:

1. because of changes in the character of the land, the neighbourhood or other circumstances considered material, the registered charge or interest is obsolete;
2. the reasonable use of the land will be impeded, without practical benefit to others, if the registered charge or interest is not modified or cancelled;
3. those entitled to the benefit of the registered charge or interest have expressly or implicitly agreed to it being modified or cancelled;
4. modification or cancellation will not injure those entitled to the benefit of the registered charge or interest; or
5. the registered instrument is invalid, unenforceable or has expired, and its registration should be cancelled.

Whether such an application will succeed depends entirely on the type and strength of the evidence before the court. Some cases succeed, others do not. In West Shore Laylum Management Ltd. (Re), a developer’s application to remove a restrictive covenant over 26 lots of a residential development was denied. The covenant was originally registered in 1959 and restricted development to single family homes. It specifically precluded commercial or multi-unit buildings on any of the lots. The developer wanted to build a residential care home for the elderly. The official community plan for the area encouraged such developments. The general neighbourhood had grown considerably over the intervening 54 years and included nearby commercial and multi-unit residential buildings. The population had increased significantly and the covenant had been previously varied to build a swimming pool complex. Despite all this, the court dismissed the application because the restrictive covenant was held not to be “obsolete” and continued to have “practical benefit” for the subdivision which had “retained its single family dwelling status and character” despite the “considerable commercial development in the general area.”

However, Tri-X Timber Corporation v. Rutherford, involved similar circumstances but ended with a successful court application to remove a building scheme that restricted further subdivision. The building scheme had originally been registered in 1969. The owner of three lots in the subdivision wanted to further subdivide his lots and build small, single family homes.  Several other property owners in the development opposed. The building scheme prohibited further subdivision without the consent of the original developer, a company long since defunct. When first built in 1969, the subdivision provided large, private lots in an unincorporated, rural area. Since then, the area had become part of a municipality and the zoning allowed for higher density. In discharging the building scheme, the Court found that while it was not “obsolete” (meaning it still had some benefit to the land owners), it nonetheless impeded the reasonable use of the land without any ongoing practical benefit. On that ground alone, the Court was entitled to discharge the building scheme. However, the Court went on to find, entirely on the evidence before it, that the other owners in the subdivision would not be injured by the removal of the building scheme.

If you own land that is encumbered by a restrictive covenant or some other restriction, it is possible to have it modified or discharged, even in the face of opposition from property owners who benefit from that covenant or restriction. The key is to assemble the necessary evidence to persuade a court to exercise the discretion given to it under the Property Law Act. Each case is fact specific and the work done to prepare before seeking the assistance of the court is critical.