A Legal Guide to Plan Farm Land Ownership in Alberta.

 
 
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 INTRODUCTION

Legal title to land in Alberta can be held in a number of different forms. Ownership rights may be subject to a variety of other claims and interests, such as crown (provincial or federal government) rights, municipal government rights and restrictions, easements and rights of way,
dower, and various forms of financial charges. An owner who leases out land (“lessor” or “landlord”) or a person who obtains a lease (“lessee” or “tenant”) must know that the lessee’s rights prevail until the lease ends. With few exceptions, these interests and claims must be registered in the land titles registration system to acquire validity and utility.

Before buying or selling land you should determine the exact legal ownership and all claims or restrictions affecting the subject title. The terms of land transactions are determined by a written purchase and sale contract. This agreement should include allocation of the price between the land itself and the buildings and other structures (and any included chattels). There are a variety of available methods of sale, including: use of a real estate agent, sale by auction, or conducting an independent private sale. Land transactions have numerous tax considerations for buyers and sellers, including municipal property tax adjustments, GST, exemptions, deferrals, and income tax on capital gains or business income, some of which are quite complex and qualified professional advice should be sought.

Starting the sale process involves the first step of determining an asking price and central terms. If you choose to list with a real estate agent, you will enter a contractual relationship with the realtor defined by a listing agreement. An interested purchaser will present an offer to purchase setting out details of price, terms, and conditions, which, once accepted, becomes the binding purchase and sale contract. Purchasers need to consider and provide for a number of things and factors depending on the type and character of the land and existing operations. An agreement is binding only once it meets all the requirements of a valid contract. There are a number of different methods of financing the purchase, the choice of which depends on your situation. The exchange of title for funds must occur in a process that ensures the purchaser obtains title free of interests and encumbrances that are not accepted or assumed, which is usually the job of the lawyers for the buyer and seller. Lawyers’ fees and expenses make up part of the transaction costs. Other professionals may have roles in the sale as to a number of practical, legal, and financial matters.

What is “Land”

What is Included and Excluded?
Land:
“Land” has a much wider meaning in law than it does in ordinary conversation. When you agree to buy or sell a parcel of land, it involves a transfer of more than just the dirt. In law, land includes buildings, fixtures, and crops, and may include minerals, water rights, and rights affecting use of bordering parcels.

Fixtures:
A “Fixture” is anything that is attached to land (or to other fixtures), and that cannot easily be removed, or, in some cases, even if it is somewhat portable, exists to improve utility of the land rather than its own utility. Obvious examples are buildings, fences, septic tanks, plumbing, floor coverings, built-in appliances, cabinets, and light fixtures. As a fixture is considered by law to be a part of the land, it is automatically included in any sale of the land unless expressly excluded.

There can be legal uncertainty in the case of particular items. If a seller wants to exclude an item subject to any doubt, they must specifically exclude it in the purchase and sale contract.

Items such as portable grain bins, tools, furniture, fuel tanks, and general equipment are not fixtures. If a purchaser wants any such items, or any items where doubt may exist, to be included in the sale they must specifically include it in the purchase and sale contract.

Mineral Rights:
In general common land law, minerals on and under land, including oil and gas, are part of the land. But, in Alberta, most mineral rights belong to the Crown, and most titles to land express this as “Excepting Thereout All Mines and Minerals” (or similar language). There are variations, which arise for Land to which titles were created prior to Alberta becoming a Province, which include minerals, or, as to such titles, the minerals title was later separated from the surface title and is held by a non-Crown owner. If you do own the mineral rights to your land, the law
presumes that a sale of the land includes them, but a seller can retain a separate title to mines and minerals if the contract expresses this, or if it was separated prior to selling the land.

Crops:
All plants growing on land at the date of transfer of title are part of the land at law and become property of a new owner. If a seller wants to retain title to crops and access to husband and harvest, then this must be expressed by the purchase and sale contract.

Water:
Bodies of water that are on your land that are permanent (lakes, rivers, streams) are considered part of your land, but the beds of the waterbodies and the water itself are owned by the Crown. The dividing line is the “high water mark” – generally where the soil changes or the non-aquatic vegetation starts. Occasionally, a title will expressly exclude a defined water body (ex. “…not covered by the waters of lake no. 119…”) or define a different boundary.

Non-permanent bodies of water on your land, like sloughs, dugouts, or swamps belong to the owner and title to this water is included when you sell.

The use or diversion of water that you do not own is generally governed by the Water Act of Alberta. There may be a need for licensing for significant diversions – if the ongoing or proposed operations involve this, a purchaser should ensure, as a condition of the transaction, that the relevant licences are transferred or acquired.

Other:
Various other documented or acquired rights may “run with the land” (or with bordering lands) and be considered, at law, part of the land. To use one example, a parcel that does not border any road access may be the subject of an access easement (which should be registered) affecting title to the appropriate bordering parcel. The express means and terms of access may significantly affect value of either or both parcels involved. If you sell parcel A, and retain parcel B that can only be accessed through that parcel, or you buy parcel B, it is of obvious importance
for an adequate registered easement to exist or be created and registered on title to parcel A (or
both parcels).

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Acknowledgment
  • Adapted from
      A Legal Guide to Farm Land Ownership in Manitoba
      Manitoba Agriculture, Food and Rural Initiatives
  • Reviewed and Prepared by
      Ian Logan and David Archibold, Barristers & Solicitors
      Sharek Logan & van Leenen LLP
      Edmonton Alberta
  • Reviewed and Prepared by:
      Alberta Agriculture & Forestry
      Livestock Research and Extension Division
      Livestock and Farm Business Branch
      7000 – 113 Street, Room 200
      Edmonton, Alberta T6H 5T6

      Rick Dehod, Farm Financial Specialist
 
 
 
 
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For more information about the content of this document, contact Rick Dehod.
This document is maintained by Nicole Halvorson.
This information published to the web on April 7, 2016.