Introduction to Legal Studies GN PDF

Summary

These notes provide an introduction to property law, covering topics such as real property, personal property, estates in land, and lesser interest in land. They also touch on mortgages, landlord-tenant relationships, and the bankruptcy process.

Full Transcript

Chapter 14 - Property Types of Property Real property: land and anything permanently attached Personal Property o Chattel: tangible personal property that is moveable and can be weighed and measured o Chosen in action: an intangible right is a claim...

Chapter 14 - Property Types of Property Real property: land and anything permanently attached Personal Property o Chattel: tangible personal property that is moveable and can be weighed and measured o Chosen in action: an intangible right is a claim on person has against another (as a claim for debt) Real Property Land and anything permanently attached to it Only the portion that can be permanently used or occupied Use is usually restricted by zoning law Mineral rights usually separate from surface rights and covered by their own body of law ** Expropriated **** → Real Property Inclusive Possession Estates in Land Estate in Land: Right of possession to land granted by the crown Fee Simple: The right to use and sell land subject only to local restriction – ownership Life Estate: Upon death of life tenant property revery back to original owner o Dower and homestead rights o Sublease property o They cannot sell o They cannot put it in their own will Leasehold: Land leased to a tenant for a specific period of time o Exclusive possession o Positionary interest Lesser Interest in Land Easement: Gives person right to use a portion of another land for a particular purpose but does not give possession Right of Way: Right to cross another’s land o Registered on the Deed Licence: Gives a person’s permission to use another’s land o Contract o Grant someone access to the land to Easement by Prescription: Right to land acquired by use o Landowners must excer4sise control periodically Adverse Possession: a right to actual land possessions through long-term use tolerated by legal owner Restrictive Covenants: Tenancy in Common and Joint Tenancy Owning property together may be joint or in common Tenancy in common: Two or more people share an undivided interest in property with each owning a designated portions of title Joint Tenancy: Two or more people own the entire property o With right of survivorship o Can be served Other Interest in Land Option gives the right to purchase and keeps an offer open for specified period (Land Speculators, leases with option to purchase) Agreement for Sale: like a conditional sale with two stages Possession and then title exchanged after last payment; includes right to retake possession if person buying land fails to pay instalments. Transfer and Registration of Interest in Land Agreement of Purchase and Sale: Contract for the purchase of commercial or residential real property May be preceded by Interim Agreement (Binding contract for sale of the property) Registration System: Registration is imposed to assist in ascertaining title Documents related to land transaction create an accurate title Land Title System: Certificate of title is conclusive evidence in any court that the person named on the certificate is the holder in fee simple of property A central registry prepares “Certificate of Title” which is binding on all parties after it has been registered Government Guarantees title – assurance fund to pay claims Certificate of title determines the interest of the parties listed on it to the land specified →Electronic Registrations System Condominiums and Cooperatives Condominiums Ownership involves a combination of unit and common ownership Bylaws outline the right and duties of members Rules must be obeyed and fees paid Cooperatives: Real Property owned in common, or by corporation with shareholders No member owns individual’s title Mortgages Involving the debtor borrowing money and giving the creditor a claim against their property (land and buildings) as added security in the event of default o Security deposit??? Historically title was transferred to lender and borrower stayed in possession Mortgage agreement is calculated on repayment of the debt over long period of time (25-30 years) Mortgagor: responsible for any short falls Equity of Redemption: Right of Mortgagee to redeem property even after default Foreclosure: Ends equity of redemption by setting a time limit Order for Judicial Sale: Application by other creditor have property sold Landlord-Tenant Relationship Leasehold Estate: Landlord retains reversionary interest in property Lessee is entitled to exclusive possession during term of the lease Contract Law Applies Lease must be evidence in writing (over 3 years) o Long-term leases may also need to be registered Leasehold interest run with the land Types of Tenancies: Term Lease: Stipulated to run for specific period of time Periodic tenancy: Period to period rental Sublets: Tenant retains reversionary interest with permission of landlord “Which shall not be unreasonably withheld” Rights and Obligations of Parties Landlord must provide: Vacant Possession: Premises are ready for occupancy Quiet Enjoyment: Must not interfere with tenant’s use of property Repair: Landlord has no general obligation to repair unless it amounts to breach of quiet enjoyment Termination: With proper notice by either tenant or landlord o Tenancy at Sufferance: Fails to leave after term of lease expires Tenants Obligations: Pay the rent: Abatement if landlord in breach of obligations Not Responsible for Reasonable wear and tear: Obligations to make repairs is used in unanticipated manner Can remove their own fixtures before termination of lease Remedies Landlord may sue for: Overdue rent Damages for breach Tenant Vacate Premises Forfeiture: Tenants forced to vacate the premises which can be accomplished by the landlord changing the locks or eviction Relief against Forfeiture: Equitable principal allowing tenant to have lease reinstated or landlord retaining right to payment if premises vacated Breach of Lease Landlord can seize tenants property (distress or distraint) Injunction available to both landlord and tenant when lease is breached Tenant may sue for injury suffered by landlord’s breach Occupiers Liability imposed on tenant ??? Residential Tenancies Provincial legislation modifies residential tenancy common law with areas typically altered including: Standard for lease Quality of facilities and repair Notice of termination periods Security deposits Rent controls Landlord has no right of distress Imposition of term lease Personal Property Chattels: Moveable things such as electronic devices, clothes, animals and motor vehicles Fixtures: a chattel when it is attached to the land and becomes part of the real property Exceptions: Trade fixture and things that have been incorporated into the structure of the building Finders Keepers Law of Finders Finder gets good title against all but the original owner Only person who has a better claim to goods that are found is the original owner Rights depend on where item is found o Public Place – The finder (subway, park) o Private Space – The owner of the place (house, driveway, ) Finder has obligation to return found goods to proper owner when it is possible to do so Bailment → In Common Law When a person (bailee) acquires temporary possession of personal property owned by another (bailor) With fungibles (similar and indistinguishable goods) the exact particular goods need not to be returned o Example: getting a replacement of an iPhone. Bailees are liable for wilful, negligent or fraudulent acts done to goods while in their possession o Duty of Care Bailment for value: legal relationship where Bailor gives property to Bailee Gratuitous Bailment: One party benefit from the temporary possession of another party’s goods, without the recipient receiving any compensation o Example: valet parking, coat check, lending book to a friend. Bailment for Value: Mutual benefit or consideration flowing between the parties Example: Goods being repaired, stored or transported Contract may be determine level of care owed In commercial relationships: level of care may be based on standards expected in the industry or explicitly stated in contracts Exemption clause may limit liability Common Carriers: have a higher standard imposed by statutes as well with innkeepers →Example: Trucking companies, airlines, and railroads Undertake the standard of an insurer Liable for damage even if not caused by negligence Innkeepers also have high duty of care but liability had been reduced by statutes in most jurisdiction Gratuitous Bailment: When only one party receives a benefit → Example: borrowing goods Historically: o When for benefit of bailee, the bailee has higher standard of care with reference to the goods o When for benefit of the bailor, gross negligence on the part of the bailee brings liability Liability today is based on the reasonable person test → Common Law o Example: Moving Company o Who is held liable and who had the duty of care Involuntary Bailment: When goods have been left without permission No duty of care until goods have been accepted Obligation to o Take care of goods o Return to bailor Repairant Rights: Water rights → cannot change the flow of water Parking Bailment: Who has possession of the vehicle Valet parking Deductibles? Exclusionary clauses: For Liability Example→Coat Check: you choose to leave your coat, Contractual arrangement Question: Is it fair to have differing standards for different types of bailment? Would a single standard provide clearer regulations concerning duty of care? Fungible: Indistinguishable Protection of the Environment Common law had provisions preserving the environment Tort nuisance protects a person from their neighbor’s use of property Tort of negligence and trespass have also been used for environmental protection Problem with common law remedies is that they require personal involvement and individual must bear cost Federal Government Have jurisdiction In matters that are interprovincial and international in scope Take place on federal land or coastal waters Power to enact environmental protection laws under its criminal law power Can exercise a considerable amount of indirect control by requiring that provincial environmental projects satisfy federal standard to qualify for federal fundings Canadian Environmental Protection Act New projects affecting the environment are assessed Provides research and development o Measurement of pollution levels, monitoring industry and punishing violation Empowers Federal Government to negotiate with province and others Empowers enforcement officer to issue compliance order Act permits parties to negotiate solution to avoid prosecution which encourages compliance Canadian Environmental Assessment Act Requires project proposal for certain activite potentially affecting the environment Reviews project to assess if further action is necessary Different levels of report from screening to comprehensive study Other federal environmental legislation contained in transportation of Dangerous Good Act, 1992 and Fisheries Act Provincial Legislation All provinces have general environmental statutes supplemented by issue-specific legislation o Example Municipalities and local governments also have significant impact Other Issues in Environmental Projects Resource development is prominent area of environmental concern o Requires sophisticated planning and significant public input Indigenous people must be consulted with respect to projects in their territories Question: The CEPA provides that due diligence is an effective defence in cases where a company has committed an environmental offence. Is the non-litigious approach of the CEPA sufficient to deter companies from committing breaches of environmental law? KEY POINTS Real property Mortgages Leasehold estates Personal property Environment protection Chapter 15 – Finance – Priority of Creditors Securing Debt by Using Personal Property Become a secured creditor o Obtaining a claim on debtor property will help a creditor get paid Real property can be taken as security→Mortgage Personal Property is used extensively as security o Pledge: title is retained by debtor but possession proved to lender o Personal Property Security: Involves the right to take possession upon default The Traditional Approach Conditional Sales Agreement o Buyer takes possession of goods o Seller retains title until last payment is made Chattel Mortgage o Creditor is not seller o Uses goods as collateral o Debtor maintains possession of goods while title is transferred Assignment of Book Accounts o Uses chose in action as security (rather than goods) o Debtor assign accounts receivable as security o In event of default, creditor has right to intercept the payment of accounts receivable Leases o Operating Lease: Goods are simply rented to the lessee for lease period o Lease to Purchase: Goods will be transferred to the lessee at the end of the lease period Personal Property Security Act (PPSA) Used in all jurisdiction in Canada Created unified approach toward the use of personal property as security Most personal property can be used as security o PPSA allows other forms of personal property (license, shares, bonds) to be used as security and to be treated uniformly Registration of claim protect secured creditors and others Personal Property Security Act … Cont’d Three Steps to Create a secured Relationship: 1. Secured Party and Debtor enter into Security Agreement 2. Security Interest attaches to collateral 3. Security interest is perfected by: o Registration OR o Possession of the collateral by the creditor Priority of Secured Creditor Secured party has prior claim to collateral over debtor Priority on same collateral: 1. First to Register 2. Purchase Security Money Interest (PMSI) Buyer in the ordinary course of business is not usually bound Rights and Remedies Upon Default Secured party mat take possession of the goods and sell them to recover the amount owed Creditor usually hire bailiff Right to Redeem: debtor must be provided opportunity to redeem o Debtor will be responsible for difference between remaining debt and sale of goods Method chosen to sell goods must be commercially reasonable Debtor is entitled to surplus Securing Debt by using Guarantees Guarantees are used by creditors to ensure payment of debt by a more substantial debtor Guarantor ensures that the debt will be paid even when the debtor defaults Differs from primary responsibility or indemnity; o Guarantees are secondary obligations and only arises after default Must be evidenced in writing o Guarantees must be in writing → to be enforceable All of the elements of a contract must be present o Consideration can sometimes be a problem Guarantees are often given under seal to avoid problems arising when guarantee given after funds are advance Rights and Obligation of the Parties →Creditor duties to the guarantor include Ensuring that guarantor understands guarantee Not weaking position of guarantor →Guarantor may be released from obligation: If contract is substantially changed When other forms of security are released Important information is withheld →Contracts can modify rights and obligations of debtor and guarantor to avoid some obligation Exemption clauses Continuing guarantee → Right of subrogation to have debt and security assigned to guarantor who pays → Any defences that are available to the debtor are also available to the guarantor Other Forms of Security The Bank Act o Federal statute allowing banks flexibility in what they can take as security Bank Act Security: Growing crops, inventories and goods in the process of manufacture Under provincial PPSA, other lender now have similar flexibility and there is more potential conflict between federal and provincial legislation Floating Charges o Used by creditor when dealing with corporations that must be free to buy and sell assets o Bonds (or unsecured debentures) may be issued when borrowing funds ▪ Bonds are secured with a floating charge against the general assest of the corporation A floating charge does not interfere with ongoing business but provides a priority over unsecured creditors Builders Liens Creates claims for the supplier of goods and services, against the real property for which they have been supplied o Suppliers of good and services can file lien Legislation stipulates the process and timing for registering liens o Holdbacks: owner of the property retains a percentage of what they would otherwise pay to the general contractor to discharge potential liens ▪ Holdback amount is 10% in most provinces Questions: A builders’ lien allows a supplier of goods to impose obligations and risk on a property owner. Is it fair for the owner of property to be subject to such an intrusion into traditional property rights? Would it be fairer to only hold the general contractor responsible? Negotiable Instruments and Letters of Credit Negotiable Instruments: In secured transaction: Cheques, bills of exchange and promissory notes Debtors are usually required to sign promissory notes in credit transaction Letters of Credit: Bank supplies letter committing to honour client’s debt up to a certain value o Used extensively in internation trades o May require a confirming bank to communicate with importer’s bank Other Laws Related to Creditor Landlord’s rights to distrain for rent o When tenant fails to pay rent on leased property o Landlord can seize and hold of defaulting tenant’s assets and eventually sell o Many restrictions Fraudulent Transfers and Preferences Fraudulent Conveyances: transferring title to an asset so it is not available to your credit Fraudulent Preferences: paying one ordinary unsecured creditor in preference to another Fraudulent Conveyances and preferences can sometimes be reversed o Federal and provincial legislation prevent debtors from unfair payment or transfers Bankruptcy Bankruptcy and Insolvency Act Federal Statute Preserves as many of the debtors assets as possible for the benefit of the creditor Rehabilitates the debtors by forgiving the unpaid debt Insolvency: A person is unable to pay his debt as they become due Bankruptcy: The process by which debtor assets are transferred to trustee Assignment in bankruptcy is voluntary Bankruptcy order is forced by creditor Involuntary Bankruptcy Process Creditor petitions the court; court makes order Results in statutory assignment of the debtor’s assets to the trustee in bankruptcy Creditor must be careful in petitioning and may be liable to losses incurred by debtor if application is refused Voluntary Assignment in Bankruptcy Debtor files “assignment for the general benefit of his creditor” and “statement of affairs” Trustee will receive the debtor’s assets and administer the estate Some property is exempt The trustee in bankruptcy holds the debtor property in trust for the creditor Priority Among Creditors Trustee in Bankruptcy o Holds assets in trust for the creditor o Preserves asset value o Sell the assets and distribute the proceed fairly to the creditor Proof of Claim: Each creditors must establish the validity of his claim Good suppliers can reclaim goods from bankrupt or trustee Trustee distributes proceeds of liquidated assets according to the priorities in legislation 1. Super Priorities 2. Preferred Creditors 3. Unsecured Creditors Bankruptcy Offences Settlements transferring asset for nominal or no consideration are prohibited o Void if withing a year of bankruptcy, debtor was insolvent or the debtor intended to defraud, defeat or delay a creditor Preferential payments may be void Bankrupt must disclose all transaction regarding assets in last year an any settlement of last 5 years Cooperate with trustee Transfer assets to trustee Restriction on Bankrupts Bankrupt is subject to several restriction: o If borrowing over $1000 must disclose status o Cannot be director of a corporation o Restricted from Carrying on certain profession Individual Discharge Discharges can be conditional or unconditional Bankrupt may be required to pay surplus income to estate Effect absolute discharge to end most debt Some obligations Survive Discharge: Student loans Apprentice loans Fines, alimony, maintenance payments o Child support payments Some civil damages awards o “Owing a neighbour money” Corporations Discharge Cannot be discharged from bankruptcy May use Division I Proposal under BIA to possibly avoid bankruptcy Corporation with large dent may restructure under Companies’ Creditors Arrangement Act Directors have some personal liability Receivership separates from bankruptcy o Triggered by terms of security agreement with creditor Alternatives to Bankruptcy Negotiation: Talk to creditors involved to try to make alternative arrangements for paying the debt BIA Alternatives: Division I Proposal (debts over $250,000) Division II Proposal (Consumer) Individual debtor with debt $1000 can apply for Order Payment of Debts in some provinces Corporations owing more than $5 million can apply for bankruptcy protection on CCAA

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