During the Fall 2014 legislative sitting, the Province of Prince Edward Island passed legislation that results in significant changes to the Lands Protection Act. The amendments have just been proclaimed and were effective January 1, 2015.

The Lands Protection Act was enacted to regulate and limit the amount of land that corporations and non-resident persons could acquire on Prince Edward Island. Historically, land in Prince Edward Island had been largely controlled by absentee landlords in England. The Province’s enactment of the Lands Protection Act was influenced by this history and was designed to ensure that land remained available for Islanders. While the legislation continues to value the preservation of land for Islanders, there has been a recognition that the demands on land are changing and that the legislation needs to adapt to that change.

NEW LIMITS TO AGGREGATE LAND-HOLDING

With the new amendments, up to 400 acres of an individual’s non-arable land, and up to 1,200 acres of a corporation’s non-arable land, is excluded from the calculation of an aggregate land holding. The amendment recognizes that farmers cannot cultivate all of the lands they own and that the limits should focus on the lands that are engaged in productive agriculture. “Arable land” is defined as meaning land which has grown an annual or biennial crop at any time in the five years preceding an application under the Act.

REDUCTION OF “DOUBLE-COUNTING”

Since 1995, leased land was deemed to be in the possession of both the lessor and the lessee and was counted towards the aggregate land holdings of both (“double-counted”).

In the amended legislation, the Province has reduced the amount of land that will be double-counted by one-half. Up to one-half of arable land that is being leased out to another person may be reduced from a lessor’s aggregate land holding (to a maximum of 500 acres for individuals and 1,500 acres for corporations). The amount of the land holding that is excluded from the lessor’s aggregate land holding is now deemed to be solely in the possession of the lessee. The remaining 50 per cent of the land held by a lessor and being leased out will continue to be deemed to be in the possession of both the lessor and the lessee and will therefore continue to be “double-counted”.

Where a lessee defaults on a lease and the lessor has given notice of the default, the lessor will once again be deemed to be in possession of the lands over which the lease was granted. The lessor must notify the Island Regulatory and Appeals Commission within 30 days after the lessee has given notice of default. Provided the requisite notice is given, the Commission will exempt these leased lands from the lessor’s aggregate land holding for a term not exceeding two years. This grace period will give the lessor an opportunity to redistribute the land, if necessary, to ensure the lessor’s aggregate land holding limits are maintained.

SUCCESSION PERIOD

A maximum five year succession period, at the discretion of the Commission, has been instituted for persons or corporations who acquire additional land by reason of death, illness or other extenuating circumstances which causes them to exceed the maximum land limits. An individual or corporation may apply for an additional two years to sort out their succession plan and manage the land in their possession.

ADDITIONAL EXEMPTION FOR LANDS FALLING WITHIN MUNICIPALITIES

The new amendments also exempt any parcel of land of less than one acre that is situated within the boundaries of a municipality with an official plan approved pursuant to the Planning Act. Before this amendment, a parcel of land within a city or town that was in existence on May 1, 1995 was exempted from the definition of “land” and therefore did not require approval. Searches at the Land Registry Office were often necessary in order to determine whether the parcel “existed” in 1995 or whether it was changed in any way since that date (i.e. by further subdivision or consolidation with another parcel) so as to remove the exemption. The amendment allows for a much easier determination as to whether the parcel is exempt and eliminates the need to apply to acquire land that fits within this definition. Controls surrounding the use of such land are already implemented by the municipality.

AUTOMATIC EXPIRATION OF CONDITIONS

Prior to the amendments, the conditions imposed on Lands Protection Act approvals (such as the condition that the lands be identified for non-development use) remained in effect in perpetuity unless the property owner filed a Notice of Termination Agreement. The effect of filing the Termination Agreement was to allow the conditions to end effective 10 years from the anniversary date of the Minister’s approval (in practice, 11 years after the acquisition). As a result of these recent amendments, it is no longer necessary to file a Termination Agreement. Conditions issued after January 1, 2015 (the “effective date”) that have not been cancelled will expire on the 10^th anniversary of the date of issuance. Conditions issued within the 10 year period before the effective date will expire on the 10^th anniversary of the date of their issuance and conditions issued more than 10 years before the effective date will expire on the effective date.

WHAT DOES THIS MEAN FOR YOU?

Individuals and corporations may be able to hold title to more land than was previously allowed. The changes to the definition of “aggregate land holding” will ensure that at least some unproductive and leased out land is not counted in calculating land limits. The changes are designed to make the legislation more reflective of commercial realities in the agriculture industry.

The foregoing is intended for general information only and is not intended as legal advice. If you have any questions, please contact any member of our Commercial Real Property & Lending Group.