Restrictive Covenant
Put simply, a Restrictive Covenant is a form of agreement between landowners in which one party restricts (i.e., burdens) the use of its land in some way for the benefit of the other landowner. Restrictive Convents can be one-way or, as in our particular case, can be mutual or two-way, whereby all land subject to the Restrictive Covenant is both burdened and benefitted.
o The Burdened Parties are, collectively, the registered owners of all of the Burdened Lands. The Benefitting Parties are, collectively, the registered owners of all of the Benefitting Lands.
In our case, all signatories to the Restrictive Covenant would be both Burdened Parties and Benefitting Parties, with their respective lots being both Benefitting Lands and Burdened Lands.
Restrictive Covenants are registered on the land title to the property and bind the land (and not the parties personally). In other words, the Restrictive Covenant ‘runs with the land’. This means that the Restrictive Covenant can continue even when the original parties to the covenant sell the land in the future. Restrictive Covenants also continue to have effect even though they were made many years ago.
A Restrictive Covenant is enforceable by one landowner against another, provided the Restrictive Covenant is restrictive or ‘negative’ in its effect. It is effectively a form of private planning control.
The restrictions in a Restrictive Covenant are not a one-size fits all set of restrictions, but must be identified clearly in the particular Restrictive Covenant document.
In our particular case, the focus of the Restrictive Covenant is on subdividing properties and changing the character of lots from a single-family residential home.
We are not concerned, for example, with renovations to existing homes, adding a second story to your family home, tearing down and rebuilding a new single-family residence, the colour of your house, building a new garage for your house or telling you what type of garden shed you may or may not have. Subject to compliance with the City’s building restriction requirements re setbacks, height, etc., you retain the same freedom as you have today in this regard.
A subset of our Team has worked on the form of the Restrictive Covenant, with a lawyer who specializes in real estate. The members of our Team included a land development expert, two lawyers with extensive real estate experience and a contracts professional with a law degree.
Here is the draft of the Restrictive Covenant. The changes between the May draft and the final document were quite modest (the inclusion of a new Article 3.4.2; the inclusion of the word “restrictions” in Article 5.2; and a modification to the execution reference at the top of page 10).
Here is a document that summarizes the Restrictive Covenant document for a non-legal audience. There were a number of minor edits relative to the May version of the document, largely as a result of the minor changes to the form of the Restrictive Covenant.
Here is the form of waiver that signatories to the Restrictive Covenant will be required to sign.
This document reflects that the onus is on each signatory to the Restrictive Covenant to obtain whatever independent legal advice they believe is appropriate for them and that there can be no guarantee that the Restrictive Covenant would be immune to a successful legal challenge at some point, despite the diligent efforts of the lawyer and our volunteers.
There is certainly an argument for that position. If you were to register a Restrictive Covenant, the pool of potential buyers would probably not include developers, and if all of your neighbours were to register a Restrictive Covenant and you don’t, it is possible that a developer might pay a bit of a premium to acquire your lot.
The flip side to the argument is that a Restrictive Covenant throughout a neighbourhood potentially increases the marketability of homes in that neighbourhood to all but developers of multi-unit homes.
This reflects the experience in the neighbourhoods in Edmonton with modern Restrictive Covenants.
As the lawyer involved in the creation of those Restrictive Covenants noted to us, the Restrictive Covenant would often increase the attractiveness to potential buyers if one of the main selling features of the property was the opportunity to live in a single detached housing neighbourhood with larger, mature treed lots, a lot of green space, a moderate level of traffic and a strong sense of community, since “we’re not making any more of them.”
The existing Restrictive Covenant in the west part of Chinook Park does not appear to have impacted the desirability of owning a home in that portion of Chinook Park or in making modifications to those homes.
A restrictive covenant must have four aspects written into the document to be legally enforceable:
1. There must be a parcel of land which is subject to a restriction (called the servient tenement or Burdened Lands) and a parcel of land which benefits from the restriction (called a dominant tenement or Benefitting Lands). The Burdened Parties are the registered owners in fee simple of the Burdened Lands, and the Benefitting Parties are the registered owners in fee simple of the Benefitting Lands.
2. At least one restrictive or negative covenant (an item that is prohibiting something as opposed to allowing something) must be included, so that a court can remedy a breach by granting an injunction.
3. The covenant must "touch or concern the land" through a restriction that enhances the use or value of the dominant tenement/Benefitting Lands.
4. The covenant must be annexed to the land through express words stating such or by implication through the provisions included in the agreement.
The servient and dominant tenements (Burdened Lands and Benefitting Lands) must be expressly identified, and are typically listed in a schedule attached to the agreement.
In our case, a property subject to the Restrictive Covenant will be both a servient tenement and a dominant tenement, which means that there is a mutual and shared obligation between the properties involved in the agreement.
Yes. The owner would need to make an application to the City of Calgary, and it would be considered taking into account approved statutory planning documents. City Council would have the final say on approval.
While there would still be an opportunity for directly affected residents and the Community Association to object strongly to the particular development, comments from the City’s Planning representatives at the February 6, 2023 Open House indicated that the reality is that the Planning Department would be very unlikely to reject the developer’s application if it aligns with the Local Area Plan. Council is very likely to approve the application for the same reasons. And assuming Council approves the land use application, a Development Permit that is otherwise compliant with the City’s requirements re height, setback, etc. will also be approved. In other words, it will probably be very difficult for parties that object to a particular development that falls within the Local Area Plan and the City’s other requirements to change the outcome.
The net effect of the approved Heritage Local Area Plan is that a developer would certainly be much more confident about the receipt of the required approval after the Heritage Local Area Plan is approved than under the current planning process because it is a statutory document.
The 90% threshold was ultimately an aspirational target.
The level of participation varies throughout the various sub-areas of each of the CKE communities. Some sub-areas, for example, do have a level of participation of around 90%, some are at around 70% and some are at 50%.
The number of “No” responses we had initially received was very modest. A larger than expected number of residents who originally indicated an interest in signing on to the Restrictive Covenant changed their minds at the time payment was to be made and the documents executed. The reasons for this change in perspective varied for residents (e.g., not wanting an encumbrance on title, not wanting to pay the required fees, not perceiving significant risk that they would see densification in the immediate area around them because of the entry cost of buying a home for a rebuild, not seeing sufficient support for the Restrictive Covenant from their neighbours). We did not have a sense from the feedback that we received from those owners that the reversals reflected a sudden general shift to support the increased densification contemplated in the Heritage LAP.
The number of residents who were undecided or who were non-responsive to multiple outreach requests (flyers and door knocking) was significantly higher than expected.
We continued to advance the project because of our belief in what we are doing, the encouragement of many of our residents and the potential for additional incremental endorsement from undecided residents.
The advice we received from the lawyer who worked with the communities in Edmonton that created Restrictive Covenants for them, is that one community had an average participation rate of about 75% and the other had an average participation rate of about 50%.
Each Restrictive Covenant was regarded by the participants as having achieved the desired outcome, as neither Restrictive Covenant has been challenged.
Developers focused their attention on other neighbourhoods because of the challenge in building a critical land position in those communities.
The Restrictive Covenant will make it much more difficult for developers to purchase multiple contiguous lots, such that they are unlikely to be able to advance a development like on 50th Ave. SW east of Elbow Drive.
We have always suggested that residents should talk with their neighbours to share their perspectives about the potential Restrictive Covenant, so that each of you is best positioned to make the decision that is the right one for each of you.
An expectation that ALL of your surrounding neighbours sign on to the Restrictive Covenant at this stage would be setting an extremely high bar.
Our community would potentially be well on the way to increased densification if everyone were to take this approach.
This is because each single withdrawal would have the effect of triggering multiple other withdrawals that would cascade throughout the entire community.
There may be some particular situations in which someone who initially said “yes” will find from discussions with neighbours that they would potentially be an island surrounded entirely by one or two layers of residents who have chosen not to sign the Restrictive Covenant.
A much more common situation, though, would be one in which a resident would have at least some other homes across the street, on the other side and behind them supportive of the Restrictive Covenant.
The protection offered by the Restrictive Covenant in this situation would still be substantive.
It is also important not to equate a home which is not subject to the Restrictive Covenant as creating a certainty or even probability that the non-signing resident will sell to a developer for a multi-unit residence soon or ever.
The Heritage LAP does not require any resident to sell their home, such that residents will choose if and when to sell their homes and to whom.
Even if a resident were selling, a developer would still be competing with families who want to move into our community (particularly for well-maintained homes).
There is no guarantee that a developer would pay a premium against that competition, given the cost inherent in tearing down the existing home.
There will also be many residents who would much prefer to sell to a family and see their house retained before selling to a developer who wants to tear it down.
As noted elsewhere on our website, the Restrictive Covenant would be expected to increase the demand for single family homes in our neighbourhood when other inner-city neighbourhoods are being densified, as the supply of inner-city single detached homes will be decreasing significantly under the City’s preferred densification model.
This level of ongoing interest of families in a modestly densified community will make it much more difficult for developers to advance widespread densification.
While there are undoubtedly residual uncertainties with a Restrictive Covenant supported by less than all of the community, the one thing that is certain is that the character of our community will be changed enormously and inalterably without the Restrictive Covenant.
One way to look at the Restrictive Covenant is as an insurance policy in retaining the essential character of our neighbourhood. While it doesn’t eliminate risk entirely, it helps mitigate significantly the exposure to this risk and provides a strong and effective deterrent to widespread densification.
For context, the City of Calgary typically ignores Restrictive Covenants because they do not recognize them as a valid planning tool. That does not change the fact, though, that the applicable property owners had freely chosen to enter into a binding contractual relationship with respect to the Restrictive Covenant that can be legally enforced in the Courts, notwithstanding the City’s preference.
Development applications will be the primary tool used to identify potential enforcement actions. As such, that there is no expectation that individual residents will be diligently monitoring their neighbours.
Typically, communities with a Restrictive Covenant would elect or appoint a committee to monitor development activity and notify signatories if a court action is required.
The Restrictive Covenant is a contractual relationship that creates adverse consequences for a party that attempts to breach the Restrictive Covenant by subdividing a lot (potential injunction, plus legal costs) or a party that attempts to strike the Restrictive Covenant in contravention of its terms (court action, potential injunction, plus legal costs).
The pursuit of legal remedies would be up to the Benefitting Parties for the applicable Restrictive Covenant to pursue.
The $500 fee per title will cover the legal costs to prepare the form of the Restrictive Covenant and the costs (including disbursements) of preparation and registration of the individual documents with the Land Titles Office, with an amount left over for the creation of an initial defence fund.
Having access to a defence fund at the time the Restrictive Covenant is completed and registered creates a strong negative deterrent to developers.
Our vision is that any top up of the defence fund that may possibly be required in due course be done on a voluntary basis, rather than through a mandated contribution of any sort.
In practice, those most directly affected by the contemplated change in status would be particularly motivated to contribute to any top up of the defence fund that may be required for any particular instance.
Restrictive Covenants are typically a perpetual obligation that runs with the applicable lots.
In our particular case, we are including an expiry date in each of the three Restrictive Covenants, such that they will expire in 75 years.
There is also a potential termination at an earlier date if approved by owners of 75% of the lots subject to the applicable Restrictive Covenant.
It is most efficient to have as many residents become signatories to the applicable Restrictive Covenant for their own community as part of the initial execution of the Restrictive Covenant.
We recognize that there may be a modest number of residents who wish to sign on to the Restrictive Covenant after the initial execution of the Restrictive Covenant.
We have included a mechanism to attempt to achieve this in the form of the Restrictive Covenant. This will be done for the applicable community when there is a critical mass of residents who want to be added to the Restrictive Covenant (i.e., not a series of separate individual documents as we are advised of another resident's interest in participating.) There will be some incremental costs to be borne by late participants because of the creation and registration of the additional documentation.
Our immediate focus was to get Restrictive Covenants in place for the remainder of CKE.
Our thinking is not far enough evolved on this point at this time to comment further on how this might work.
The westerly section of Chinook Park has had a restrictive covenant registered on single detached RC-1 lots since the early sixties. University Heights, Mayfair Bel-Aire, Britannia, and Banff Trail are a few of the communities in Calgary that already use a Restrictive Covenant to preclude densification of their neighbourhoods.