Who would every imagine that British Columbia, Canada would eliminate private property rights costing property owners billions of dollars. What was the bombshell ruling? Why is it almost impossible for anyone to buy or sell in Canada? What does this mean for US real estate (take a look at the chart above)?
What was in the bombshell Canadian ruling on private property rights?
British Columbia’s Supreme Court recently ruled that a group of indigenous tribes, the Cowichan Nation, has a “senior and prior” right to private land on a roughly 730-acre tract in Richmond, including his Country Meadows Golf Course.
The court order could leave private property in 95% of British Columbia vulnerable to claims from indigenous groups that have been seeking to reclaim ownership of land taken from them scores of years ago, said government officials and property lawyers.
“I feel like I don’t have title here anymore,” said Hogler, 80 years old, who moved from communist Slovenia decades ago. “There was no warning.”
The ruling has roiled the wealthy districts of the greater Vancouver area, one of the most expensive real-estate markets in the world. Its scope has shocked businesses, homeowners and community leaders, who fear that it nullifies the principle of “indefeasible title,” the legal term for absolute certainty of land ownership, setting a precedent that threatens billions in real-estate investment.
Why is the ruling on private property so important for real estate in Canada?
British Columbia’s Supreme Court had ruled that a group of indigenous tribes, the Cowichan Nation, has a “senior and prior” right to private land on a roughly 730-acre tract in Richmond, including his Country Meadows Golf Course.
The court order could leave private property in 95% of British Columbia vulnerable to claims from indigenous groups that have been seeking to reclaim ownership of land taken from them scores of years ago, said government officials and property lawyers.
“I feel like I don’t have title here anymore,” said Hogler, 80 years old, who moved from communist Slovenia decades ago. “There was no warning.”
The ruling has roiled the wealthy districts of the greater Vancouver area, one of the most expensive real-estate markets in the world. Its scope has shocked businesses, homeowners and community leaders, who fear that it nullifies the principle of “indefeasible title,” the legal term for absolute certainty of land ownership, setting a precedent that threatens billions in real-estate investment.
Canadian private property ruling makes it impossible to buy or sell real estate in British Columbia
Basically, the ruling has created a cloud on title. This cloud on title will make it impossible to get title insurance or a loan. Furthermore, anyone looking to lease a property, remodel a property, develop a property, etc.. have doubts about ownership. Essentially this ruling has brought most real estate in British Columbia to a screeching halt.
Here is an example of what is happening: a Canadian developer, Montrose Properties, thought it had secured a tenant to build a warehouse on a 190,000-square-foot lot just south of Vancouver. Now the deal is unraveling because of the ruling. The tenant is looking elsewhere, and a bank that had pledged financing for the deal is pulling out, said Ken Low, Montrose’s chief executive.
Private property lawsuit leads to Billions in losses to title companies
Nobody is really discussing the huge liability that could reach into the Billions. The premise of title insurance is to insure against title claims. Based on the ruling in Canada, almost every title in British Columbia will be impacted. For example, assume you bought a house 2 years ago and obtained title insurance, now the tribe supposedly has a claim on your property impacting your title and ability to sell, refinance, etc… The title company would have to defend your title or pay the loss due to the compromised title. Long and short, if this ruling stands, look for litigation to happen for years while property owners are in limbo
Two largest title insurance companies in Canada are from US
Looking at the chart above, two of the largest title insurance companies are Stewart and Chicago, both US based title insurance companies. It is unfathomable to think that either of these title companies have reserves to cover losses of this magnitude as the ruling is unprecedented. If each of these companies had a billion dollars in losses this would be a huge financial blow to both of them that likely would percolate to their US title operations leading to huge financial fall out.
Canadian ruling is a warning sign for US private property rights
The ruling in Canada is unprecedented and will cause immense financial harm to the entire province of British Columbia making their property basically worthless. Furthermore, even though the US is not directly impacted from this ruling it could easily destabilize the title insurance market here due to the huge losses in BC.
This ruling in Canada should also be a stark warning for many US states including Colorado that continue to infringe on private property rights like rent control. As we can see in British Columbia, the real estate market is basically dead as there are substantial questions about private property rights we would not want the same event to occur in the US as the impacts would be catastrophic to the real estate market and the general economy.
Additional Reading/Resources
- https://www.wsj.com/world/americas/canadas-1-billion-question-do-property-rights-still-exist-in-british-columbia-6e38df2a?
- https://www.fairviewlending.com/the-war-on-landlords/
- https://coloradohardmoney.com/rent-control-through-the-backdoor-in-colorado-passed-the-house/
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Glen Weinberg personally writes these weekly real estate blogs based on his real estate experience as a lender and property owner. I’m not an armchair reporter/writer. We are an actual private lender, lending our own money. We service our own loans and own commercial and residential real estate throughout the country.
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Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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