Whether you’re a land owner, prospective buyer, or have an interest in real estate or municipal planning, you may have heard of the Planning Act before. This blog will provide a brief overview of the Planning Act (Ontario) and a summary of a few of the 2022 amendments made to Section 50.

What is the Planning Act?

The Planning Act is provincial legislation which governs Ontario’s land planning, including how and by whom land can be used, divided, and developed. The Planning Act sets ground rules to ensure that land is used in ways that promote sustainable and efficient development, cooperation and coordination among various stakeholders, and fair planning processes that balance the interests of land owners and municipalities.

Section 50 of the Planning Act

Key to the Planning Act and Ontario real estate transactions is Section 50, the section that controls the subdivisions of land in the province. For many years, no major legislative changes or reconsiderations had been made to Section 50, though on January 1, 2022, several amendments to this section came into force.

For many, these amendments were long awaited. The section had been notorious for creating title complexities and unintended consequences for land owners, sellers, and purchasers in Ontario.

Most notably, Section 50 will void any land transaction or transfer if its prohibitions are contravened, ultimately resulting in a failure to create a valid interest in the land. That means that if the section is not complied with, transactions or transfers will have no effect. While this control measure is intended to prevent the division of land into smaller parcels, due to misunderstandings and technicalities it has also nullified transactions that pose no planning or division issues. The 2022 amendments are, in part, aimed to eliminate the possibility of future occurrences of these unintended consequences.

The Amendments

Through clearer language and new provisions, the amendments resolve several challenges with the Planning Act. Below are summaries of some of the 2022 changes:

Abutting properties no longer merge on the death of a joint tenant

Before the 2022 amendments, where abutting properties were held by joint tenants, the death of one tenant would result in an automatic merger of the properties where the surviving co-owner would come to own both parcels of land. For example, if two family members jointly owned two separate but abutting parcels of land, such as a family cottage compound, the death of one of those members would mean the cottage compound becomes one parcel of land and the surviving family member owns both parcels. This would occur whether or not there was an intention for the surviving person to become the sole owner or for the properties to merge.

An attempt to recognize the two parcels of land as separate after an inadvertent merger was a costly and time-consuming process which involved an application for consent to the municipality. It was also possible that the abutting parcels of land could be irreparably merged if the municipality did not consent to the severance of land.

Following the 2022 amendments, the status of jointly-owned abutting properties will remain separate in the event of the death of one of the joint owners.

Consent applications that are in progress can be amended

If a person wishes to make changes to their land, they must apply for and be granted municipal consent. Without obtaining consent from the applicable authority, any changes would contravene the Planning Act.

Before the 2022 amendments, if a property had an in-progress application for consent but had a change in plans or the applicant realized an omission after submitting the application, they would need to submit a new application and begin the process for consent again. This costly and time-consuming resubmission requirement is no longer necessary – now an existing application can be amended while in progress up until the consent is refused or granted.

Purchasers can make consent applications

The amendments also enable buyers to make consent applications on their own behalf between the signing of the agreement of purchase and sale and the ultimate closing date, as long as the agreement of purchase and sale authorizes it.

Previously, between the signing of the agreement of purchase and sale and the final closing date, only the property owners, mortgagees, or an agent could make a consent application. If the purchaser wished to make one, they would have to go through a convoluted process that required negotiating specific language in the agreement of purchase and sale. Even with this negotiation, the vendor would have to submit the application as an agent for and on behalf of the vendor.

Extension of time to satisfy

Under the Planning Act, consenting authorities can impose conditions when granting provisional consent. Before the amendments, the statutory timeline to satisfy the conditions of a consent was one year. If all conditions were not met within one year, then the application for consent was deemed to have been refused. This time frame was not always feasible given the extent of conditions a municipality can impose, uncooperative parties, or surveying delays.

Now, the statutory timeline within which one must satisfy the conditions of a consent is two years, making compliance with the terms of severance more feasible.

Consent is not required for outdoor ancillary spaces

The Planning Act allows owners to grant rights in parts of a building for terms longer than 21 years, but before the amendments this right did not extend to areas and amenities external to the building. For example, the rights would apply to a unit in a shopping mall but did not extend to something like a parking lot or patio outside of the building. This exclusion made it quite difficult to deal with outdoor areas and amenities. With the amendments, owners can now more freely grant rights to outdoor ancillary areas, and they no longer need to apply for consent to do so.

Conclusion

The amendments to Section 50 of the Planning Act simplify the rights and obligations of land owners, sellers, and purchasers wishing to subdivide, ultimately saving them time and expenses and providing a more user-friendly guide to subdividing property in Ontario.

As it applies to virtually every land transaction in Ontario, understanding Section 50 is very important for land owners, sellers, and purchasers. To further understand the Planning Act or any of the amendments, you can reach out to Barriston and we will be happy to assist.

Written by Blair Tinkham and Christine Nickel