Residential Real Estate TransactionsChapter 1 · 63 practice questions

Chapter 1: Listing, Marketing and Selling Residential Property

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Land Use and Property Types

LAND USE AND PROPERTY TYPES Module ON-REAL2 — Zoning, Land Use Controls & Property Classification LAND USE CLASSIFICATIONS RESIDENTIAL COMMERCIAL INDUSTRIAL AGRICULTURAL SFD, MFD, Apt Retail, Office Light, Heavy Farm, Ranch ZONING & LAND USE CONTROLS ZONING BYLAW OFFICIAL PLAN VARIANCES REZONING CONDITIONAL USE EXCEPTIONS PROPERTY TYPES RESIDENTIAL COMMERCIAL INDUSTRIAL MIXED-USE Single, Multi Retail, Office Warehouse, Flex Res + Comm GOVERNMENT & LEGAL FRAMEWORK MUNICIPAL LEVEL • Zoning bylaws • Official Plan • Building permits • Development charges • Property standards PROVINCIAL LEVEL • Planning Act • Building Code • Land Titles Act • Environmental protection • Tenant protection FEDERAL LEVEL • National Building Code • Mortgage rules • Environmental assessment • Indigenous lands • National housing policy Land Use Classifications • Zoning Controls • Property Types • Government Framework — Module ON-REAL2

Overview

This chapter examines the legal and regulatory frameworks that define how land can be owned, used, and developed in Ontario. Real estate professionals must understand the hierarchy of property rights, the different forms of tenure, and the various public and private restrictions that affect land use. The material covers the fundamental distinction between freehold and leasehold estates, the characteristics of condominium and cooperative ownership, the interplay between municipal zoning and official plans, and the legal mechanisms—such as easements, restrictive covenants, and non-conforming use protections—that can override or coexist with zoning permissions. Mastery of these concepts is essential for advising clients on property transactions, development potential, and compliance obligations.

Public vs. Private Land Use Controls Public vs. Private Controls — Land Use Official Plan > Zoning By-law · The most restrictive rule prevails PUBLIC Controls 📋 Official Plan Higher-level policy document adopted by the municipality ✓ Approved by the province prevails 📐 Zoning By-law Permitted uses, densities, setbacks, heights ✓ Subordinate to the Official Plan ⚖️ Committee of Adjustment Minor variances · Legal non-conforming use Cannot amend the Official Plan 🏚️ Legal Non-Conforming Use (Grandfathered) Existed legally before the new zoning Destruction > 50% = loss of grandfathered rights PRIVATE Controls 🔗 Easement (Servitude) A real right burdening the servient tenement for the benefit of the dominant tenement ✓ Runs with the land 📜 Restrictive Covenant Private agreement registered on title e.g., max fence height 1.5 m at the front ✓ Binds all successive owners 👥 Successive Owners Bound Private rights run with the land GOLDEN RULE — CONFLICT OF STANDARDS The most restrictive rule (public OR private) prevails · A zoning variance cannot remove a restrictive covenant Source: ON-REAL2 Ch.1 — Public and Private Restrictions on Land Use
Committee of Adjustment and Minor Variances Committee of Adjustment and Minor Variances Municipal quasi-judicial body — Minor variances and non-conforming uses COMMITTEE OF ADJUSTMENT Quasi-judicial body independent municipal ✓ MINOR VARIANCES e.g. accessory dwelling, extension, setback margins, height ✓ NON-CONFORMING USE Authorizes the extension or change of a use protected by vested rights ✗ DOES NOT MODIFY The Official Plan falls under the municipal council (s. 17 Planning Act) ✗ DOES NOT ISSUE Building permits — responsibility of the municipal building department OWNER Submits an application for a minor variance PUBLIC NOTICE Publication and notice to neighboring owners HEARING The committee hears the application and objections DECISION Approval or refusal of the variance APPEAL POSSIBLE Appeal Tribunal ■ Committee jurisdiction ■ Outside jurisdiction ■ Application process ■ Appeal route Minor variance application process Jurisdiction and limits of the Committee of Adjustment
Legal Non-Conforming Uses Legal Non-Conforming Uses LEGEND Permitted use Prohibited use Variance required Existing non-conforming use (preceded the zoning regulation) Has the use been interrupted? NO YES ✓ The use continues As long as it is not interrupted (often 6 months to 1 year) ✗ Acquired rights lost The use must cease; return to current zoning Expansion planned? NO YES ✓ Use maintained No modification required Minor variance Authorization from the Committee of Adjustment required Building destroyed > 50%? NO YES ✓ Repair / reconstruction permitted ✗ Acquired rights lost Identical reconstruction PROHIBITED Change to another non-conforming use? NO YES ✓ Current use maintained Only the existing use is permitted ✗ Prohibited Not permitted Art. 34, Land Use Planning Act Threshold: often 50% of value or area The most restrictive restriction applies

Key Concepts

Tenure and Estates in Land

Fee Simple – The highest form of private ownership in common law. The owner holds the land indefinitely, free of any conditions except public law restrictions (e.g., zoning, taxation) and residual Crown rights. This is the most common tenure for residential, commercial, and industrial properties. A fee simple owner may sell, lease, mortgage, or bequeath the property.

Tenure and Estates in Ontario Tenure and Estates in Ontario Comparative table — Property types and associated rights Tenure Nature of Right Key Characteristics Typical Example Legal Particularity Fee Simple (Fee simple) Absolute title Most complete ownership Limited restrictions: Crown rights, existing easements Single-family homes No conditions other than those provided by law Leasehold Tenure (Leasehold) Right to use for a fixed term (e.g., 99 years) Ground lease The lessor retains title to the land House on land leased from a First Nations reserve Rights and obligations set out in the registered lease Life Lease (Life lease) Right of occupancy for life No title Initial payment non-refundable (or partially) Retirement residences Personal right of enjoyment, no ownership of land Condominium (freehold condominium) Title to the unit + share of common elements Boundaries defined by the declaration of condominium Condominiums (declaration and registered plans) Status certificate (status certificate) required Housing Cooperative Shares in a corporation The corporation owns the building No individual title Cooperative housing Right of occupancy via a member agreement Tenancy in Common Ideal share without division Joint ownership (e.g., siblings) Family inheritances Judicial partition via the Partition Act Planning Act · Partition Act · Condominium Act
Condominium Documentation Condominium Documentation Divided co-ownership regime — Essential documents and key information ① Registered declaration and plan 📐 Unit boundaries Walls, floors, ceilings — precise reference 🏢 Common areas Lobby, roof, land — undivided share 🔑 Exclusive common areas Use reserved for one owner: Private terrace, designated parking Registered document — binds all co-owners ② Status certificate 💰 Financial health Contingency fund, budget, arrears ⚖️ Ongoing litigation Lawsuits, claims, disputes 📋 Special assessments Additional fees voted or planned ⚠️ Notice of non-compliance Violations of building regulations Note: Generally does not include municipal zoning details provided before purchase ON-REAL2 · Ch.1 · Condominium

Leasehold – A right to occupy land for a fixed term under a lease, without owning the land itself. The occupant’s rights and obligations are defined by a long-term lease contract, often called a ground lease, which is registered on title. Leasehold tenure is typical for properties on leased land, such as some Indigenous lands or land held under a 99-year lease. The leasehold estate is a possessory interest, not an ownership interest in the fee.

Life Lease – A hybrid tenure common in seniors’ housing. The occupant pays an initial sum (resembling a purchase price) and obtains the right to live in the unit for life. Upon death, the right may revert to the operator or be transferred to a new occupant. Unlike a condominium, the life lease holder does not hold title to the unit; the arrangement is governed by a long-term occupancy agreement.

Condominium – A form of ownership where the buyer holds fee simple title to a specific unit and an undivided share of the common elements (e.g., hallways, grounds, recreational facilities). The boundaries of each unit are defined in the condominium declaration and registered plan, which specify where walls, floors, and ceilings lie. The condominium corporation manages common elements and enforces rules.

Cooperative (Co-op) – Residents do not own their individual units. Instead, they own shares in a corporation that holds title to the entire building. Shareholders receive a right of occupancy under a proprietary lease. This structure means the occupant has no direct title to real property, only a share interest.

Tenancy in Common – Co-ownership where each owner holds a separate, undivided fractional interest in the whole property. No right of survivorship exists; each owner may sell or mortgage their share independently. If co-owners cannot agree on a sale, any co-owner may apply to the court for partition and sale under Ontario’s Partition Act. The court will order a sale if dividing the property physically (partition) is impossible or would cause prejudice.

Land Use Controls: Public and Private

Zoning By-laws – Enacted by municipalities under the Planning Act, zoning by-laws regulate the use of land, building density, height, setbacks, parking, and permitted activities. They are legally binding and apply to all properties within the municipality. A zoning by-law cannot permit a use that conflicts with the municipality’s official plan.

Official Plan – A higher-level policy document that sets out long-term land use directions for a municipality. All zoning by-laws and public works must conform to the official plan. If a zoning by-law permits a use that contradicts the official plan (e.g., residential in an employment zone), the by-law may be outdated or in conflict, and an amendment is required. Developers cannot rely solely on zoning; they must verify conformity with the official plan.

Restrictive Covenants – Private agreements registered on title that restrict how land may be used. They run with the land and bind all subsequent owners. Examples include prohibitions on fences above a certain height or bans on commercial activity. Restrictive covenants are independent of zoning; the more restrictive rule (public or private) prevails in practice. A zoning variance does not override a private covenant.

Easements – A right to use another’s land for a specific purpose (e.g., a right-of-way for access, a drainage easement, an environmental easement limiting noise). An easement is a real property right attached to the land (the servient tenement) and binds all owners. Even if zoning permits an activity, a valid easement may prohibit or restrict that activity. The easement holder can enforce the right and seek removal of obstructions.

Environmental Restrictions – Designations such as provincially significant wetlands are protected under official plan policies and the Conservation Authorities Act. These designations impose strict restrictions on development, often requiring environmental assessments. They do not automatically prohibit all construction on the entire property, but they limit or prohibit work on sensitive areas.

Constructive Expropriation (Constructive Taking) – A legal principle where a municipality’s zoning by-law effectively removes all reasonable use or economic value from a property, even though no formal expropriation occurs. In rare cases, the owner may be entitled to compensation. This principle arises when regulation goes beyond legitimate police power and amounts to a taking of property without compensation.

Non-Conforming Uses

A legal non-conforming use is a use that lawfully existed before a zoning by-law change that would now prohibit it. Under the Planning Act, such uses may continue indefinitely, but rights are limited. Key rules:

  • Continuation – The use may continue as long as it is not discontinued for a period specified in the by-law (often six months or a year).
  • Expansion – Expansion is generally restricted. Some by-laws allow limited increases in floor area or volume, subject to criteria. A minor variance from the Committee of Adjustment may be required if the expansion does not comply with the by-law’s non-conforming use rules.
  • Destruction – If the building is destroyed or damaged beyond a specified threshold (commonly 50% of its value or floor area, as set by the by-law), the non-conforming use rights are lost. Rebuilding identically is then not permitted unless the by-law allows otherwise.
  • Change of Use – Switching to another non-conforming use is not permitted; only the original use continues.

Committee of Adjustment – A municipal quasi-judicial body that hears applications for minor variances to the zoning by-law and applications regarding extensions or permission for legal non-conforming uses. It does not amend the official plan or issue building permits; those powers rest with municipal council and the building department.

Subdivision Process – When a developer proposes a new subdivision, the municipality reviews the plan and typically requires a subdivision agreement. This agreement sets out the developer’s obligations for infrastructure (roads, water, sewers, parks) and must be signed before the plan is registered. The approval is often conditional upon finalizing the agreement.

Condominium Documentation

  • Declaration and Plan – Define unit boundaries, common elements, and exclusive use common elements. Exclusive use common elements are parts of the common property reserved for the use of one or more owners (e.g., a private terrace, a designated parking spot). They are distinct from general common elements.
  • Status Certificate – Provided to a buyer before purchase, it contains information about the condominium’s financial health, pending litigation (including use-related lawsuits), special assessments, and notices of non-compliance. It does not typically list zoning details; those are obtained separately.

Important Regulations and Procedures

  • Partition Act (Ontario) – Allows a co-owner of land to apply to court for partition or sale of the property when co-owners cannot agree. The court may order a sale if physical division is impracticable.
  • Planning Act (Ontario) – Governs land use planning, including official plans, zoning by-laws, subdivision control, and non-conforming use provisions. Section 34 addresses the continuation and loss of non-conforming uses upon destruction.
  • Conservation Authorities Act – Provides for the protection of wetlands and other sensitive areas. Provincially significant wetlands are subject to restrictive policies that often require environmental assessments before any development.
  • Expropriation Act (Ontario) – Sets out the process for formal expropriation and compensation. The principle of constructive expropriation is an emerging common law doctrine, not codified, but recognized by courts in limited circumstances.
  • Code of Ethics – Real Estate Agents – Agents must exercise due diligence, disclose material facts, and advise clients regarding land use restrictions. An agent who fails to inform a buyer that a desired use (e.g., a home-based salon) is prohibited by zoning may be liable for misrepresentation.

Relationships Between Concepts

  • Zoning vs. Official Plan: The official plan is the superior document. If a zoning by-law conflicts with the plan, the by-law must be amended to conform. Developers must check both.
  • Public Controls vs. Private Controls: Zoning by-laws and official plans are public law. Easements and restrictive covenants are private law. Both apply simultaneously; the stricter rule must be followed. A zoning variance cannot nullify a private covenant.
  • Non-Conforming Use and Destruction: The right to continue a non-conforming use is lost if the building is destroyed beyond a threshold. This links directly to the concept of vested rights and the principle that non-conforming use is a limited privilege, not an absolute right.
  • Tenure and Ownership Structure: Condominium and cooperative differ fundamentally in whether the occupant holds title to a unit (condominium) or shares in a corporation (co-op). Life lease and leasehold are tenures that do not involve fee simple ownership.
  • Minor Variance and Non-Conforming Use: The Committee of Adjustment is the proper venue to seek permission for a minor expansion of a non-conforming use. This is distinct from a zoning by-law amendment, which goes to council, or an official plan amendment.
  • Easements and Environmental Restrictions: An environmental easement (e.g., restricting noise or construction) can override zoning permissions. Zoning does not automatically prevail; the easement is a real right that binds the land.
  • Constructive Expropriation and Zoning: A zoning by-law that eliminates all economic use may be challenged as a constructive taking, potentially requiring compensation. This is a rare exception to the principle that municipalities may regulate land without paying compensation under their police power.

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