Explanation of encumbrances that have the power to subdivide
Many registered encumbrances allow the interest holder to take the owner’s title in certain circumstances. A common example is a mortgage, where if the owner of mortgaged lands stops paying their mortgage the lender can foreclose and take the land. That said, the lender is only entitled to take the lands that are in the mortgage. In a subdivision, if the owner of mortgaged land were to acquire additional lands and consolidate those new lands with the lands they already owned, the existing mortgage would not affect those new lands. If the new and the old lands were consolidated together to form a new lot, the mortgage would therefore only affect part of the lot.
In the event that the owner stopped paying their mortgage, when the lender foreclosed they would only be entitled to take that part of the new lot that the mortgage initially affected. And this would cause a subdivision, one that has not been approved by the subdivision authority.
Encumbrances that have the power to subdivide must be dealt with
Encumbrances that have power to subdivide cannot be carried forward to only part of a newly created lot. The following options are available when dealing with encumbrances that cannot be carried forward:
- Full discharge of the encumbrance
- Partial discharge to release the encumbrance from the lot that is not entirely affected by the encumbrance
- Amending agreement adding land to make the portion of the lot that was not initially affected by the encumbrance affected by it
Encumbrances that have the power to subdivide
- Mortgages
- Many caveats, including
- Agreement for purchase and sale of land
- Beneficial interest under a trust
- Equitable mortgage
- Equitable owner
- Unregistered transfer of land
- Option to purchase
- Leases where the term of the lease plus renewals adds up to more than 21 years
- Certificates of judgment
Encumbrances that do not have the power to subdivide
- Easements
- Right-of-way agreements
- Party-wall agreements
- Shared well agreements
- Personal Property Security Notices (PPSN)
- Certain caveats, including
- Leases where the term of the lease plus all possible renewals adds up to less than 21 years
- Easement/right of way/encroachment agreements
- Restrictive covenants
- Building restriction covenants
- Municipal development agreements
- Well agreements