Beware the Common Law Building Scheme: The Supreme Court of British Columbia Broadens its Considerations for Cancelling a Charge under the Property Law Act
Once a tool of orderly development usually used in the absence of municipal zoning, historical common law building schemes and restrictive covenants now sit quietly on many property titles across British Columbia. Despite the fact their practical benefit expired long ago, these building schemes and restrictive covenants remain potentially enforceable and effectively stall or even block further development or changes on properties against which they are registered. In a province facing urgent housing needs, these historical charges can effectively freeze entire neighbourhoods in the character of a bygone period.
That tension was central in the recent case of Smith v. Clearwater Park GP Inc. (“Clearwater”), where the Supreme Court of B.C. ordered the cancellation of a decades-old building scheme on the grounds that it no longer served its original purpose.
What are Building Schemes?
Before the advent of municipal zoning and the provincial Land Title Act, developers in B.C. often used common law building schemes (frequently registered as restrictive covenants) to create and preserve a uniform character over large parcels they intended to subdivide and develop. These schemes generally limited building size and use, prohibit renovation or further development, precluded further subdivision, and often dictated matters such as exterior colour, all so a developer could ensure the appropriate and consistent development of their subdivision.
The key feature of common law building schemes is that they “run with the land”, binding each successive owner in a subdivision to the developer’s original restrictions. Once a subdivision was completed and the original developer ceased to exist, these building schemes remained on title and are enforceable unless a court orders their removal or modification under the Property Law Act.
The Clearwater Decision
Clearwater resolved two opposing petitions concerning the same common law building scheme originally registered in the late 1950s on title to a large tract of land that was then subdivided into over 200 residential properties located in the Garibaldi Estates neighbourhood of Squamish, B.C.
The building scheme was originally registered by Garibaldi Estates Park Limited (the “Developer”), who subdivided, fully developed and had sold all the lots in Garibaldi Estates by the late 1970s. The building scheme set out a list of restrictions, including a prohibition on the construction of new buildings or the modification of existing ones, precluding more than one dwelling unit per parcel, and prohibiting any further subdivision. Importantly, the building scheme provided that many of these restrictions could be waived with the approval of the Developer or an “Approving Officer” appointed by the Developer. The Developer, a company, was dissolved in 1983, which meant that the prospect of invoking the covenant’s approval mechanism for any changes had disappeared.
Clearwater Park GP Inc. purchased one of those residential lots in 2024 intending to construct a four-unit townhouse complex – something permitted under Squamish’s updated zoning bylaws. Neighbouring property owners, the Smiths, objected and petitioned the court to enforce the building scheme. They sought a permanent injunction to block the project. Clearwater Park GP Inc. responded with its own petition, asking the court to cancel the building scheme as against its property on the basis that it was obsolete under the Property Law Act.
Justice Verhoeven found that the loss of the sole decision-making authority for requested deviations from the building scheme rendered its core mechanism unworkable and frustrated its original purpose – making it obsolete.
In support of this conclusion, Justice Verhoeven found that many dwellings within Garibaldi Estates had been renovated or rebuilt since the 1980s, all without complying with the building scheme and without objection from neighbouring property owners. This longstanding disregard further illustrated the obsolescence of the building scheme, leading Justice Verhoeven to remark that the Smith’s concerns about increased density were “overblown”.
Implications of Clearwater
There are two significant takeaways from Clearwater for any landowner seeking to enforce or remove a common law building scheme.
First, a building scheme may be cancelled if its purpose is frustrated. Where a building scheme contains a decision making mechanism for deviations to its restrictions – such as a developer’s approval – which can no longer be exercised, a court may declare that building scheme obsolete and order its cancellation or modification.
Second, courts will now consider broader public policy objectives in assessing whether to exercise its discretion under the Property Law Act. Justice Verhoeven gave more weight to Squamish’s need for increased housing density and population growth over the historical objective of preserving a low-density character neighbourhood, as the Smiths had contended was the intention of the building scheme.
Landowners or developers in B.C. seeking to develop or redevelop a parcel of land should carefully review the registered charges on title before undertaking any development. While Clearwater is a helpful precedent for removing common law building schemes, landowners must assess, among other considerations, whether the original purpose of any building scheme on title is still applicable. In seeking to have such building scheme’s discharged by court order, the property owner must be prepared to show circumstances exist that call for the intervention of the courts under section 35 of the Property Law Act, including the obsolescence of the building scheme. The Clearwater decision is a helpful precedent in seeking such relief.