Lessee's control critical factor
The Alberta Court of Appeal has held that the lessee's degree of control over land is the critical factor in determining whether a lease is an illegal subdivision. The length of the term of the lease and the lump sum payment of rent are not determinative: Paskal Holdings Inc v Loedeman [2017] FICR 10.
A new owner was trying to evict an elderly couple who had sold their quarter section of land (160 acres) to a prior owner and leased back 10 acres with a house and buildings. The unregistered lease gave them a life interest but they could not sell their interest and would lose it if they left the land.
The new owner said the lease was invalid because it was an illegal subdivision contrary to section 94(1) of the Land Titles Act but the court said that in some circumstances a portion of a parcel may be leased without infringing the purpose of planning legislation. That section said:
"No lots shall be sold under agreement for sale or otherwise according to any townsite or subdivision plan until a plan creating the lots has been registered."
The chambers judge held that the lease was not a subdivision principally because the lease would be terminated if the lessees left the land and they did not have the major incident of ownership: they could not alienate the land.
Subdivision by lease is dealt with differently in the Australian states, New Zealand and Singapore where there is a statutory presumption that a lease of part of the land for more than a particular number of years is a subdivision.
Read the full head note here: [2017] FICR 10.
