Jason Bryk 

Phone: 204.956.3510

Fax: 204.957.0227

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As Chair of the Real Property Subsection Committee for the Manitoba Bar Association and as the Designated Representative for Manitoba Real Property for the Canadian Bar Association I am often contacted by solicitors who have general questions about real property law in Manitoba; pursuant to a recent inquiry, real estate solicitors may find the following to be not only informative but also practical.


Being a Manitoba solicitor and a Public Member of the Association of Manitoba Land Surveyors, the practical information that will be shared in this article must be qualified with a disclaimer that pursuant to The Land Surveyors Act C.C.S.M. c. L60 (Manitoba) no person other than a Manitoba land surveyor shall engage in the practice of land surveying and thereby no person other than a Manitoba land surveyor shall determine, establish, locate, demarcate or define a boundary used to reference, describe or delineate, inter alia, land.


On occasion a solicitor may encounter a title with a legal description whereby a Legal Subdivision is referenced in lieu of a plan number, for example:


LEGAL SUBDIVISIONS 3, 6, 11 AND 14 OF SECTION 22-13-8 WPM


The reference to "legal subdivision" may cause confusion and with no ability to order a "plan" the solicitor must consider standard Section measurements in determining "what land" the title is for.


Importantly:


(a)  1 square mile is equal to 5,280 feet x 5,280 feet;

(b)  1 Section is equal to 640 acres or one square mile;

(c)  4 Quarter Sections equal 1 Section;

(d)  1 Quarter is equal to 160 acres;

(e)  1 Legal Subdivision is equal to 1320 feet x 1320 feet akin to one quarter of a Quarter Section


As a Legal Subdivision is equal to 1320 feet x 1320 feet is akin to one quarter of a Quarter Section,  the next question is where within a Quarter Section and where within a Section is a Legal Subdivision located?  To answer, a diagram of a Section is of remarkable assistance:




SECTION 22-13-8 WPM

 




LEGAL SUBDIVISION 13








LEGAL SUBDIVISION 14




LEGAL SUBDIVISION 15




LEGAL SUBDIVISION 16




LEGAL SUBDIVISION 12








LEGAL SUBDIVISION 11




LEGAL SUBDIVISION 10




LEGAL SUBDIVISION 9




LEGAL SUBDIVISION 5









LEGAL SUBDIVISION 6




LEGAL SUBDIVISION 7





LEGAL SUBDIVISION 8




LEGAL SUBDIVISION 4









LEGAL SUBDIVISION 3




LEGAL SUBDIVISION 2




LEGAL SUBDIVISION 1



In considering this information we should keep in mind why it is important for a solicitor to know where the land they intend to convey is located; one must only consider the problems that have occurred within various condominium corporations throughout the Province of Manitoba where a condominium unit is incorrectly conveyed, for example, unit owner A is the registered owner of unit 1 but actually resides in unit 2, the registered owner of unit 2 being unit owner B; the incorrectly conveyed unit would most certainly have conveyed correctly had the solicitor, or for that matter the real estate salesperson, reviewed the condominium plan with the prospective unit owner prior to the conveyance and thereby identified the location of the unit not having relied solely upon the numerical designation for the physical condominium suite.   Notwithstanding that condominium units and Legal Subdivisions are different, the same principles apply whereby the solicitor, or for that matter the real estate salesperson, should ensure that the Legal Subdivision being conveyed is indeed the same physical land that the transferor believes it is transferring.


To conclude, you may still be wondering why the title of this article is "Are you looking for 20 chains?", importantly the "chain" was the manner in which our early River Lots, Outer Two Miles and Sections were measured and a Legal Subdivision being equal to one quarter of a quarter section is equal to 20 chains x 20 chains or 1320 feet x 1320 feet.  So, if you are conveying a Legal Subdivision it is prudent to "look for 20 chains" to ensure that the land being legally conveying is indeed the physical land that ought to be conveyed.

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May 2003


 

            When a lender makes a loan at a fixed rate of interest with the interest (and usually the principal) repayable in installments over a set period of time, an earlier than expected repayment of the loan may result in the lender suffering a loss.  Such loss would occur where at the time of early repayment, the rate of interest which the borrower promised to pay over the whole term of the loan is higher than the rate of interest which the lender could then charge if it immediately re-loaned the money to a new borrower.  Given the then market conditions, any new borrower would only be prepared to pay a lower rate of interest.  The lender’s loss is typically determined by reference to the value of the difference between the higher and lower rates over the balance of what would otherwise have been the remainder of the term of the original loan.


            Actuarial mathematicians can calculate what that value is in the form of a lump sum of money which the lender would want to receive to eliminate its loss (“Early Repayment Loss”).  Sometimes lenders will agree to an early repayment of their loan provided that the borrower concurrently pays such lump sum as compensation to the lender for the loss of the loan investment over its originally-intended term. 


            In the McMillan Fisheries Ltd. Case (the “McMillan Case”, British Columbia Supreme Court, in Bankruptcy, judgment filed March 3, 1998), a question arose as to whether or not a lender was entitled to obtain an Early Repayment Loss which the borrower had promised to pay in the event of an early repayment of the loan.  The Court pointed out that in general, where a borrower wishes to repay the loan before the time stipulated in the loan agreement, the borrower cannot force the lender to accept such monies, but it is certainly open to the lender to agree to an early repayment in consideration of the borrower agreeing to pay an Early Repayment Loss amount to the lender.  However, if there has been a default by the borrower and the lender has exercised its right to accelerate repayment in full, the cases show that the lender is usually not entitled to require the borrower to pay any Early Repayment Loss.  The reasoning here is that now that the lender wants its money back (i.e. having accelerated), it should not be entitled to be compensated for getting that money back earlier than expected.


            Notwithstanding this reasoning, the Court noted that earlier case law had held that where the parties’ agreement was that the loan’s “maturity date” was always to remain the last day of the term of the loan, and that the agreement specified that such maturity date was not to be brought forward to the date of acceleration following the borrower’s default, the lender was entitled to extract an Early Repayment Loss from the borrower.  Unfortunately for the lender in the McMillan Case, the parties’ agreement clearly specified that the loan “maturity date” was the earlier of the last day of the stipulated loan term and the date upon which the lender chose to accelerate an early repayment of the loan following the borrower’s default.  On that basis, the Court held that the lender was not entitled to any Early Repayment Loss.


            An interesting sidelight of the McMillan Case is that the borrower also argued that even if the lender was entitled to receive its Early Repayment Loss amount based on what the parties had agreed to, the lender should nevertheless be disentitled from receiving same on the basis of Section 8 of The Interest Act (Canada).  Section 8, in effect, provides that following default by a borrower of a real estate secured loan, the lender is not entitled to extract any fine, penalty or other amount which has the effect of increasing the rate of interest on the outstanding loan monies after default, to any rate higher than the rate of interest which was applicable prior to default.  However, the Court noted that prior case law had made it clear that the obtaining of an Early Repayment Loss by a lender even after default and acceleration did not offend the requirements of Section 8 because such an amount can be properly categorized as compensation for the lender’s loss (as described above), rather than a fine or penalty or increase in the rate of interest post-default.


            In another recent case (the “Pfeiffer Case”, British Columbia Court of Appeal, March, 2003), a question arose as to whether or not a mortgagee who agrees to accept an early repayment of a term loan can require the borrower to pay an extra amount which is not calculated with reference to the present value of the mortgagee’s lost interest over the balance of the term.


            In exchange for permitting early repayment  of the loan in the Pfeiffer Case, the mortgagee demanded an amount equal to the difference between the mortgage rate and the (then lower) prevailing mortgage rate multiplied by the amount prepaid (the entire balance of the loan) and calculated over the remaining balance of the loan term.  This amount was not discounted for the purpose of obtaining a present value lump sum amount, nor did the calculation take into account the fact that the principal balance of the loan would have been reduced over the remainder of the term by virtue of the scheduled periodic (monthly) combined principal and interest payments, if there had been no early repayment.  The borrower’s argument was, in effect, that, as a matter of law and notwithstanding the terms of the mortgage, the mortgagee’s entitlement to extra monies by virtue of the early repayment should be limited to the mortgagee’s actual loss over the balance of the term, discounted at the time of the early repayment.  The Court held that the mortgagee was not so limited and could, in effect, charge whatever consideration it wanted as the price for the borrower to make an early repayment of the loan. 


            An interesting question not addressed in the Pfeiffer Case is whether or not, in a particular case, a Court might hold that the consideration required by the mortgagee to permit early repayment is so unduly high that it constitutes an unreasonable penalty.  Aside completely from the operation of Section 8 of The Interest Act, the courts have long enjoyed an inherent right to relieve persons from having to pay unreasonable penalties.  Since most mortgage lenders do calculate early repayment consideration based on their anticipated loss of interest over the balance of the term, discounted so as to produce a currently payable lump sum, this potential problem may not arise very often.

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November 2010


Readers are referred to the writer’s earlier memoranda dealing with the above subject matters:


(i)            a paper entitled “New Provincial Government Rules for Wastewater Management Systems”; and


(ii)           a paper entitled “Further Thoughts on the New Provincial Government Rules for Wastewater Management Systems”.


In these memoranda (the “Original Memoranda”), I attempted to outline the application of the Manitoba Wastewater Regulation (passed under the Manitoba Environment Act), as amended by Manitoba Regulation # 156/2009 which was registered September 28, 2009, and, to raise certain questions relating to problems or potential problems which I thought would or could arise out of such application.

After considerable lobbying by concerned stakeholders, the provincial government has further amended the Onsite Wastewater Management Systems Regulation by Manitoba Regulation # 60/2010 which became effective May 25, 2010.


The writer has sought and obtained certain clarifications and advice from Manitoba Conservation Environmental Services (“Manitoba Conservation”) regarding the Regulation as most recently amended (the “Amended Regulation”) and now wishes to report to those interested, as follows:

  1. The general rules (originally specified in MR156/2009) apply with respect to wastewater management systems and sewage ejectors, namely:

(a)          if one’s property is serviced by a wastewater management system and the property is also capable of being serviced by a community wastewater collection system, then, if that was the situation on September 28, 2009, the property owner must decommission their wastewater management system and “connect” to the “community” wastewater collection system within the earlier of five years from September 28, 2009 and the transfer or subdivision of their property.  If one did not have a community wastewater collection system available to be connected to on September 28, 2009, but subsequently, such a collection system is put in place, then the owner must decommission and connect to the (new) collection system by the earlier of five years from when the newly installed collection system is available and the transfer or subdivision of the property;


(b)          where one has a sewage ejector on their property on September 28, 2009, the owner must take it out of service by the earlier of the transfer or subdivision of the property.

                        In both of the above situations, if the owner fails to remediate prior to transfer to a new owner, the new owner is obligated to remediate within two years from the change of ownership.

  1. The latest amendment to the Regulation now provides for certain exemptions applicable to property owners with sewage ejectors on them, although not for property owners with other types of wastewater management systems.  These exemptions are:

(a)          for where the property owner with a sewage ejector on it sells to a purchaser and the purchaser undertakes in writing to remove the sewage ejector after acquisition of the property (within the earlier of two years following acquisition and subdivision or transfer by the purchaser);


(b)          for where the sewage ejector:


(i)            is not located within certain restricted areas specified in the Regulation (which includes the "Red River Corridor" and provincial parks); and


(ii)           is in compliance with all regulatory requirements applicable to sewage ejectors;

and the property owner, not more than one year prior to contemplated transfer or subdivision, seeks and obtains a certificate of exemption from the government (if the exemption is issued, then, subject to the terms thereof, neither the owner or a subsequent owner needs to remove the ejector); and


(c)          for where the owner of the property on which a sewage ejector is situated decides to subdivide the property into two or more lots with one only of those subdivided lots having the ejector on it, the owner may, with the government’s approval, complete the subdivision and sell off all of the lots except the one with the ejector on it provided that the owner then removes the ejector on the retained property within up to a maximum of two years from subdivision.

  1. As noted, the above-described exemptions apply only to sewage ejectors, and not to wastewater management systems.  This means that where at the time of a sale, a wastewater management system on the property which is supposed to be removed by virtue of the sale is not removed by the seller, but instead is removed by the purchaser (with there no doubt being an adjustment in the purchase and sale price accordingly), then even though the purchaser properly remediates, the seller is still open to prosecution.  In this writer’s opinion, this is somewhat of an absurdity.  Unfortunately, at the present time, the government does not appear to have any plans to extend the sewage ejector type exemptions to wastewater management systems.
  2. Samples of the forms required by Manitoba Conservation to be used to apply for exemptions may be obtained at

            http://www.gov.mb.ca/conservation/envprograms/wastewater/index.html, and the fees for processing exemption applications range from $50.00 to $150.00.

  1. Manitoba Conservation is entitled to impose conditions on exemption orders. Manitoba Conservation has advised that the types of conditions imposed on any particular exemption order “will be consistent with the intent of the Act and would be determined on a case-by-case basis”.
  2. It is important to note that where a purchaser undertakes responsibility to remove a sewage ejector following closing, but for whatever reason, the sale and purchase transaction fails to close, the Regulation recognizes that the purchaser will be relieved - as far as the government is concerned- from its undertaking.  Needless to say, where the deal between a seller and a purchaser is that the purchaser will remediate after closing, the sale and purchase agreement should correspondingly specify that the purchaser is relieved of any obligation to remediate if the purchase and sale transaction fails to close for any reason whatsoever.

Some other matters to note are:


(A)          Manitoba Conservation provides a file search service for $94.50 (which includes GST).  Unfortunately, if the information which is provided when a search request is made does not:


(i)            indicate whether or not the particular property searched is serviced by a community wastewater collection system; nor


(ii)           indicate whether or not the local government with jurisdiction over the property searched has indicated to Manitoba Conservation that the local government intends to bring in a community wastewater collection system which would be available to service the subject property within the next five years.


Presumably someone interested in obtaining this information would have to first determine what is the relevant local government and then request that local government to provide this information.  Whether or not any particular local government will be willing and/or able to provide this information and at what cost is not known to this writer.


(B)          Regarding the meaning of the word “transfer”:


(i)            “transfer” is now defined in MR60/2010 as “including”, among other modes of change of ownership, “transmissions”.  Change of ownership from one person to another where both persons are spouses or common law partners are not considered to be a “transfer”.  But all other changes of ownership which occur by operation of law are caught within the definition. Thus, it is at least arguable that changes of ownership occurring by reason of bankruptcy, intestate succession (except amongst spouses and common law partners), corporate amalgamations, etc. would constitute “transfers”, thus triggering an obligation to remediate (in the absence of an exception).  The definition of “transfer” applies to both dealings with properties which have sewage ejectors on them and properties which have wastewater management systems on them.  Given the use of the word “include” in the definition of “transfer”, a Court called upon to analyze the language may – or may not – hold that non-consensual changes of ownership are “transfers” within the meaning of the Regulation.  Manitoba Environment advises that it will deal with each situation on a case-by-case basis;


(ii)           It is unclear as to whether or not “transfer” includes the leasing of a property, an absolute assignment of an existing leasing of a property and/or a transfer of the beneficial ownership interest in a property (where a title remains in the name of the “old” owner and the “old” owner takes a declaration of trust stating that it now owns the property as a bare trustee for the “new” owner).  Again, Manitoba Conservation advises that they will deal with such situations on a case-by-case basis.

Unfortunately, given the above, it will be somewhat difficult to predict in advance as to whether or not certain change of ownership transactions will be treated by Manitoba Conservation (and for that matter, the Courts) as  “transfers” under the Regulation;


(iii)          The Regulation, even as most recently amended, still does not indicate whether or not a privately owned community wastewater collection system would be treated as a wastewater collection system for the purposes of the Regulation.  While the vast bulk of wastewater collection systems are and will no doubt be owned by some level of government (typically a municipality), it is certainly conceivable that a number of property owners in proximity to each other might band together and establish their own wastewater collection system.

Hopefully, the government/Manitoba Conservation will either further amend the Regulation to clarify the issues raised above, or at the very least, will, by way of one or more policy statements, give some guidance to stakeholders regarding these matters.

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