August 15th 2024
Welcome to our latest newsletter! Today, we will consider the sale of land being split into one (1) or more pieces. We will review some key features of Ontario’s Planning Act and consider the distinction of when land can be sold through a legal severance and the circumstances in which a legal severance is not needed. Understanding these differences is crucial for anyone involved in a real estate transaction where multiple lots are in play, whether you are a homeowner, developer, or investor. Let’s explore these concepts in detail.
Legal Severance
A legal severance involves the division of a piece of land into smaller parcels. Section 53 of the Planning Act outlines the process, requirements, and conditions under which a severance may be granted. Property owners wishing to sever their land must apply to the local Committee of Adjustment or Land Division Committee for the consent to sever. The application typically includes detailed plans, surveys, and justifications for the proposed severance. The committee assesses whether the proposed severance aligns with local zoning by-laws and regulations, including items such as minimum lot sizes, frontage, and land use. The proposal must be consistent with the municipality’s Official Plan, which is a comprehensive guide of land use and development in the area. The committee assesses whether the severance serves the public interest and evaluates potential environmental impacts, including effects on natural habitats and watercourses. Last, the committee confirms that provisions for services like water, sewage, and utilities can be adequately delivered to the land being developed.
The Planning Act also mandates that notice of severance applications be given to the neighbouring properties and that an opportunity for a response be provided. This ensures transparency and allows residents to voice their concerns or support for any proposal. If an application for severance is refused or if the conditions imposed are disputed, the applicant or other interested parties have the right to appeal the decision to the Ontario Land Tribunal (OLT). The OLT has the authority to uphold, modify, or overturn the committee's decision.
If a severance is approved, the committee may impose further conditions that must be met before the severance is finalized. This can include various provisions such as requirements for road widening, parkland dedication, grading, or other land improvements. Once all conditions are satisfied, the landowner can proceed with the creation of the new lots. A new lot is then given a unique Parcel Identification Number (PIN) in the Land Titles System. The PIN is a unique identifier assigned to a specific parcel of land in Ontario. This system is part of Ontario's land registration and information management framework, which helps streamline property transactions and ensures accurate records of land ownership and interests. Ultimately, the sale of land once a PIN is created means a purchaser will be able to close a transaction with proper safeguards including title insurance coverage for their parcel of land.
The Sale of a Whole Lot on a Plan of Subdivision
Occasionally, a seller will own two (2) or more whole lots on a registered plan of subdivision. A registered plan of subdivision is a detailed survey that divides a parcel of land into lots and blocks for development. It has been approved by the municipality and registered with the local land registry office, making the lots legally recognized for sale and development. This means that even when a single PIN is used to describe two (2) separate parcels of land that are abutting, a landholder may sell only one (1) of the lots separately without the need for a severance. This is referred to as a PIN split, as a new PIN is created. There are a few considerations to ensure the sale of a whole lot through a PIN split is legal. First, it must be established that the landholder does not also hold an interest in land abutting the whole lot being sold unless the abutting land is also the whole of a lot or block in a registered plan of subdivision. The primary purpose of Subsection 50(3)(b) of the Planning Act is to control the division of land and prevent the creation of “unusable” lots. In such an event, consulting with a lawyer to determine the best path to deal with the land is highly advisable. Second, there cannot be a home or other fixture that already spans across the lots. In such an event, the individual wishing to sell the whole lot will need to remove or correct for such fixtures before splitting the PIN.
Conclusion
In conclusion, selling land by creating one (1) or more separate parts can feel like a daunting task. However, the option to sell may be readily available to a landholder in certain circumstances. For this reason, it is important to work with a trusted real estate professional to ensure that you get the best advice before entering into a contract for the purchase or sale of land. For any questions regarding your real estate transaction, do not hesitate to reach out to Liddiard Law.
Michael Liddiard, BA MA JD
Liddiard Law Professional Corporation
michael@liddiardlaw.ca