Chapter 8
Property
8-2
Types of Property
• Property refers to a person’s rights to something (not to the thing
itself)
• Real property - land and anything permanently affixed to it
• Personal property
• Tangible, movable items – chattels or goods
• Intangible property
• Choses in action
• Intellectual property
Who Has the Right to the Goods?
• Possession gives right to goods over all others except
someone with prior claim
• Rights depend largely on how goods were acquired
• Rights can depend on where object is found
• Person who finds and takes possession of goods has
obligation to take care of them for rightful owner
Who Has the Right to the Goods?
(Continued)
Bailment
• Bailment - One person takes possession of and cares for
goods of another
• Bailor – person who delivers goods
• Bailee – person who takes goods
• Duty of bailee varies by nature of bailment
Bailment
(Continued)
• Gratuitous bailment - only one party receives a benefit
(e.g., borrowing goods, storing goods)
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When for benefit of bailee, duty imposed on bailee requires
high standard of care
When for benefit of bailor, duty imposed on bailee is lower
Nature of goods also affects duty owed
Bailment
(Continued)
• Involuntary bailment
• Judge imposes reasonable person test
• Bailment for value - Of mutual benefit or by contract
• Duty of care imposed on bailee is that of reasonable person
• Usually industry standards or terms of contract
• Exculpatory clauses interpreted narrowly
Bailment
(Continued)
• Bailment for value
• High standard imposed on common carriers and innkeepers to care
for goods of customers
• Statutes limit liability today
• Right of lien (keep possession) if bailee not paid
Real Property
• Real Property - Land and things permanently attached to it
• Personal property can become part of real property when affixed
to it
• Includes reasonable use of space above land
• Includes right to use of land below
• Does not include mineral/oil and gas rights
Fee Simple Estates
• Same rights as ownership; indefinite
• Government always has the power to control, restrict, or
expropriate
• Life estate - Gives ownership rights to beneficiary, but only for
the length of his/her life
• Holder of life estate can’t damage property
• Heirs have remainder interest
Fee Simple Estates
(Continued)
Leasehold Estate
• Leasehold Estate - Exclusive use and possession of land for
a specified time
• May also be periodic
Lesser Interests in Land
• Easement – gives another permanent right to use land
• Right of way – gives right to cross property
• Restrictive covenant – restricts how property can be
used
• Must be negative to bind all future owners
Lesser Interests in Land
(Continued)
• Building scheme – restrictive covenants that benefit all
properties in a development area
• License – contractual right to use land, but gives no
interest in land
• Profit a prendre – right to remove material from land (e.g.,
trees)
Owning Property Together
• Joint tenancy
• Joint ownership of whole property
• If one dies, survivor gets that person’s portion
• Tenancy in common
• Each party has an undivided interest
• No right of survivorship
• Each may sell, mortgage, or lease their portion
Owning Property Together
(Continued)
• Dower rights and homestead rights
• Traditionally protected spouse in case of marriage breakdown
• Statutes now give spouse claim to family assets even when not
registered on the title
Owning Property Together
(Continued)
• Condominiums
• Share ownership of common property; fee simple interest in
individual unit
• Rules of use set by condominium (or strata) corporation
• All owners pay fees and special levies to maintain common
property
Owning Property Together
(Continued)
• Cooperatives
• Members own whole property together
• Each share entitles occupancy of a specific apartment
Option to Purchase
• Commitment to hold an offer to sell open for a specified
time
• If option not exercised, no further obligations
• Often used by developers and speculators
Requirement of Registration
• Land registration systems
• Land Registry system
• Depository of documents
• Must search to determine ownership
• Land Titles system
• Guarantees title
• If mistake or fraud, insurance fund will compensate
Transferring Land
• Agreement of purchase and sale
• Form submitted to land registry
• Criminal offence to destroy, cancel, conceal, or obliterate
documents
• Adverse possession will allow for title transfer in Land Registry
jurisdictions
• Right to cross land may also be acquired by prescription in
Land Registry jurisdictions
Mortgages
• Method of financing purchase of property
• Possession of land remains with purchaser, but title is
transferred to creditor as security
• Right to redeem title by payment of debt
• Known as equity of redemption
• If there is a default, creditor forecloses
Mortgages
(Continued)
• Foreclosure is a two-stage process
• First, a time limit is set for exercising the equity of redemption
• During this time, the debtor attempts to re-finance or sell the property
• If not paid, either
• final order of foreclosure, or
• Court Order for sale by mortgagee
Mortgages
(Continued)
• Second or equitable mortgages
• Equity of redemption used to secure more debt (rather than legal
title to property)
• More risk; therefore a higher interest rate
• Court gives second mortgagee right to try to sell property during
redemption period
• Must pay off all previous mortgages
• Debtor may have to pay any shortfall
Leasehold Estates
• Right to exclusive possession and use for specified time
• Periodic Leases
• Lease for specified period
• Automatically renews for same period
Leasehold Estates
(Continued)
• Any lease longer than three years must be in writing to
be enforceable
• Considered an interest in land
• In some jurisdictions, frustration applies to leases by
statute
Commercial Tenancies
• Agreement determines obligations in commercial leases
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Vacant possession
Quiet enjoyment
Obligations to make repairs
Termination of lease
Commercial Tenancies
(Continued)
• Obligations of tenant
• Pay rent
• Use property only as agreed
• Comply with terms of lease agreement
Commercial Tenancies
(Continued)
• If tenant fails to pay rent, landlord has options
• Terminate tenancy (forfeiture); tenant may ask court to
order relief
• Distraint involves seizing tenant’s goods for rent owed;
tenancy continues
• If tenant abandons, can sue for rent for rest of lease
Commercial Tenancies
(Continued)
• Landlord has no duty to mitigate in case of abandonment
• Duty to repair will be specified in lease
• Lease also specifies rights to renew, sublet, or assign
• Tenant may take fixtures used for their business when they
go (as long as property is not damaged)
Residential Tenancies
• Legislation has greatly modified common law and varies by
jurisdiction
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Standard form leases with written copy to tenant
Repairs and health standards
Entrance to premises
Assignment and subletting
Deposits
Notice of rent increases and termination
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8 - 32
Residential Tenancies
(Continued)
• Landlord
• Must maintain services
• Cannot seize tenant’s property
• Must mitigate losses
• Residential tribunals hear complaints
• Frustration applies to residential tenancies
Regulation of the Environment
• Common Law
• Riparian rights – People living on river or stream have right to
continued quality and quantity of water flow
• May be overridden by statute
• Torts of nuisance, trespass, etc.
• Ineffective in protecting environment
Regulation of the Environment
(Continued)
• Federal Legislation
• Fisheries Act – Control of pollutants in fish-bearing water
• Canadian Environmental Protection Act – created government
department responsible for preventing pollution and protecting
environment and human health while contributing to sustainable
development
Regulation of the Environment
(Continued)
• Canadian Environmental Protection Act (Continued)
• Significant enforcement power
• Can require pollution prevention plans
• Directors, managers, and agents of businesses can be held liable
for violations (unless due diligence shown)
• Provides for civil remedies
Regulation of the Environment
(Continued)
• Canadian Environmental Assessment Act
• Projects controlled by federal government must go through environmental
assessment process
• Provincial legislation
• All provinces and territories have legislation similar to Canadian Environmental
Protection Act
• Covers environmental concerns within provincial jurisdiction
• Overlap of regulations at federal, provincial, and municipal levels
poses problems for businesses
Insurance
• Purchase insurance by paying premiums
• Spread risk as only a few will need compensation
• Insurance companies may reinsure potential losses through
larger companies
• Policies are usually standard form, but may have riders and
endorsements
Insurance
(Continued)
• Insured must have insurable interest in subject of policy to
recover for loss
• Insured only compensated for actual loss (based on coverage
purchased)
• Co-insurance clauses usually require 80% of value insured
• Maintain insurance equal to value of property
Insurance
(Continued)
• Deductible – Amount insured must pay toward loss
• Salvage rights – Insurer has right to salvage what it can from
the loss
• Subrogation rights – Once insurer pays, insurer assumes
insured’s right to sue
Insurance
(Continued)
• Property insurance
• Business interruption insurance
• Liability insurance
• Life insurance (key personnel in business)
• Health and disability insurance
• Comprehensive insurance policy
• Duty of good faith for all policies
• Must fully disclose all relevant information
Bonds
• Bonds are similar to insurance
• Fidelity bond
• Employer buys bond to cover wrongful conduct by employees
• Surety bond
• Guarantees performance of a contract