My cottage is on leased First Nations lands

Do you own the land your cottage sits on? If it’s built on reserved First Nations land, you probably don’t. We’ve had questions from many B.C cottagers with leasehold interests looking to clarify their title insurance coverage. It’s important to understand the practice of leasing land and what your options are, whether or not you currently have a title insurance policy.

What is a leasehold interest?

A leasehold is a type of land tenure where someone buys the right to occupy a building or piece of land for a set time. During the period of the lease, it gives the leaseholder the exclusive right to possession. It works like a type of temporary ownership. In fact, it’s possible to mortgage or sell an existing lease to someone else, which makes leases with long terms valuable real estate assets.

How does title insurance benefit cottagers with a leasehold interest on First Nations land? What coverage is provided?

Title insurance provides the same coverage for a cottage that it does for a primary residence. Cottage properties carry the same title and off-title risks as any home, and can be riskier in some ways.

Many older cottages have had extensive repairs done by previous owners, who may or may not have gotten permits for the work. Also, even leasehold interests with new-build cottages carry the risk of unlawful eviction.

What happens if a title insured leaseholder is unlawfully evicted?

First, an insured would need to prove either:

• loss of enjoyment due to a prior interest;
• third party title claim;
• or lawful prevention of the use of the land or improvements permitted by the lease as a result of a covered risk. For example, a covered zoning issue or restrictive covenant.

Once the claim is successful, the leaseholder would be compensated for:

• the value of the remaining lease term;
• reasonable costs of removing and relocating;
• cost of repairing the improvements caused by the removal and relocation;
• damages they’d have to pay to a subtenant on account of the breach of any sublease caused by the eviction, if any;
• and the amount of rent, if any, the insured has to keep paying the leaseholder after eviction.

How much does a title insurance policy cost on First Nations land?

Title insurance has a one-time premium, which depends on factors like province and property type.  For a policy covering a First Nation lands leasehold interest for a property with six or fewer units, assume a starting point of $500. The premium can be higher, based on the property’s value.

Does title insurance provide any protections in the case of a land claim for a cottager?

If the property is non-urban, vacant, and/or on a waterfront, we exclude Indigenous land claims.  Our definition of “urban” is a property that’s connected to either municipal sewers and/or municipal water. So if the property is “urban,” not on a waterfront and the insured doesn’t know about any land claims, it’s protected from losses due to Indigenous land claims.

If I didn’t title insure my lease when I bought it, is it too late?

No, it’s not too late. You can still purchase a title insurance policy after taking possession of a property. To ensure you have the best coverage, it’s always better to get protected sooner rather than later. You can get started here, and enjoy more protection for your cottage property.

Insurance by FCT Insurance Company Ltd. Services by First Canadian Title Company Limited. The services company does not provide insurance products. This material is intended to provide general information only. For specific coverage and exclusions, refer to the applicable policy. Copies are available upon request. Some products/services may vary by province. Prices and products/services offered are subject to change without notice.

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