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Some real estate transactions may include unwanted restrictions

When one purchases a property, it is typically the buildings or the land that is wanted. However, many real estate transactions also bring with them pre-existing restrictions on the property and its use. These inherited conditions may cause difficulty to new owners who wish to utilize their property in an otherwise prohibited or restricted manner. A scenario like this is currently playing out in Alberta's western neighbour. 

Two large property development corporations and one retailer are banging heads over a proposed mixed-use facility in Burnaby. One company, the owner of a major retail centre, is at odds with a second company that wishes to construct an enormous new project on land it acquired in 2015 after joining forces with retailer Sears in a $100 million deal. The plan involves the construction of a new retail space, including a new Sears store, and multiple high-rise units for residential and commercial use.

The owner of the existing shopping centre is crying foul, and taking the opposing developer to court. They claim the other developer cannot develop the property without permission. The basis of the claim is an agreement signed in 1986, which neither party was originally a part of, but which both have inherited through real estate purchases. While each property is owned separately, the agreement stipulates development of the two parcels must be harmonious. Under the current terms, the redevelopment plan would require 15 months notice, be approved for compatibility, and the store could not be closed for more than 150 days.

Ownership of a property does not guarantee the right to use that property however one sees fit. There may be land-use restrictions such as by-laws, or older contracts or agreements in place that may need to be adhered to. It is a good idea to enter into any real estate transactions in Alberta with full awareness of any limitations there may be on a property. A real estate lawyer can help a prospective buyer to understand exactly what he or she is getting into.

Source: CBC News - British Columbia, "Metrotown mall owners sue developer over proposed mixed-use towers", Maryse Zeidler, March 4, 2017

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