Indian Land Transactions

INDIAN LANDS IN GENERAL
 
Reserve lands are held in trust by Her Majesty for the benefit of the band members. Her Majesty may lease band lands pursuant to Sections 53 and 58 of the Indian Act. In such leases, Her Majesty is the lessor and not the band or the band member who has a certificate of possession for that particular parcel of land.
 
Section 28 (1) of the Indian Act provides that any agreement by which a band or a member of a band purports to permit a person other than a band member to occupy or use Reserve Land is void without the consent of the Minister. Therefore any transactions involving Indian Lands which do not follow the proper channels, i.e. are not consented to by the Minister, are not enforceable.
 
We will talk about the different ways Reserve Lands are held and the ways in which one can viably obtain an interest in Reserve Lands below.
 
THE INDIAN LANDS REGISTRIES
 
The Indian Act, which governs all dealings with respect to Indian Lands, provides for two main types of registries. The Reserve Lands Registry (established by Section 21) records transactions respecting lands which are allotted to individual band members by way of a Certificate of Possession (locatee lands). The Surrendered and Designated Lands Registry (established by Section 55) records particulars in connection with any transaction affecting absolutely surrendered or designated lands (lands held by the Band itself).
 
The Reserve Lands Registry is not a true "Registry" in the conventional sense because there is no statutory requirement to register transactions in this Registry. Registration does not necessarily give priority to a registered instrument over an unregistered instrument. The Surrendered and Designated Lands Register, on the other hand, more closely approximates a true registry system by giving priority to interests which are registered first in time and by giving registered instruments priority over unregistered instruments (Section 55).
 
There are other registries maintained by the Registrar, but we will not touch upon them here as they do not materially affect the types of transactions we are discussing.
 
LOCATEE LANDS
 
Dealing firstly with locatee lands, a locatee is a Band member who holds a Certificate of Possession issued by the Minister for a particular parcel of land on a Reserve. An allotment of Reserve Land to a locatee under Section 20 of the Indian Act grants a right to possession that is similar in many respects to fee simple ownership in that it may continue indefinitely so long as there are heirs to the estate, it may be sold or transferred during the lifetime of the owner to another Band member, and it is exclusive to the locatee. A Certificate of Possession issued by the Minister may be set aside by a Provincial Superior Court where it is established that the Band Council meeting which approved the allotment had not been "duly convened". A locatee can also lose his or her right to possession if the Certificate of Possession was issued through mistake or fraud or if the land is expropriated.
 
A locatee who holds a Certificate of Possession has the ability to transfer it to another Band member with the approval of the Minister, but cannot give a mortgage to a Bank of his or her Certificate of Possession since the right to possession cannot be transferred to a non-Indian. However, pursuant to Section 58(3) of the Indian Act, the Minister may lease for the benefit of any Indian, on application of that Indian, the land for which the Indian holds the Certificate of Possession. These are the types of locatee leases which we are commonly dealing with when are acting for purchasers or mortgagees of developments on Indian Lands.
 
These locatee leases are made on the application of the locatee by the Minister and show Her Majesty the Queen in the Right of the Canada as the Landlord and the developer as the Lessee. The locatees are not actually parties to a lease except for a Consent attached to it. If a developer is negotiating a locatee lease and the term is for more than 49 years, a meeting must be held of the Band electors to consider the impact of the lease on the social, cultural, economic, and environmental situation of the Band and the adequacy of the rent and term. If the term of the proposed lease is for 49 years or less, it is referred to the Band Council for a Band Council resolution that states that the proposal does not contravene Band approved land use plans or zoning bylaws. Once the terms of the lease are agreed upon between the developer and the locatee and the Department of Indian Affairs who acts to protect the locatees interest, the lease is executed by all parties, consented to by the Minister and given an application number at the approval office prior to being forwarded to Ottawa for registration at the Indian Lands Registry.
 
Because the lease does not have any legal effect until the Minister has consented to it, and because there is no statutory requirement to register, leases of locatee lands are commonly considered to be effective at the time Ministerial Consent has been granted and transactions are often closed on that basis. Because Ministerial Consent is one of the crucial requirements for validity of the charge, and because the registry system cannot be relied upon as an indication of the priority of the charge, it is advisable to require that assurance be given by the entity giving approval on behalf of the Minister that no other charges affecting the land have been consented to by the Minister prior to the charge being submitted for approval. Unfortunately, a record of the Consents given by the Minister through the Department of Indian Affairs is not available to the public. For lands located in the Westbank Indian Band reserve, however, such assurances are available, as discussed below.
 
If the developer then seeks financing and gives a Mortgage of Lease to secure the loan, the Mortgage must be signed by the Mortgagee with all execution formalities complying with the Indian Lands Registry Procedures Manual, be in a form that complies with the terms of the Lease, be approved by the Minister and be forwarded for registration just as the Lease was. As there is no statutory requirement to register a mortgage of lease of locatee lands, the charge will be effective at the time the Minister grants his consent and priority may be determined as against other charges on the same lands by the time the Minister consents. Receiving assurance that the Minister has not consented to any other charges in priority is difficult on land other than Westbank Indian Band Land.
 
There is some disagreement within the legal profession as to whether effective security can be given on locatee lands. Section 89(1) states:
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"Subject to this Act the real and personal property of an Indian or a band situated on a reserve is not subject to charge, pledge,mortgage, attachment, levy, seizure, distress or execution favour or at the instance of a person other than an Indian or a band."
 
Section 89(1.1), a recent amendment, goes on to state:

"Notwithstanding subsection (1), a leasehold interest in designated lands is subject to charge, pledge, mortgage, attachments, levy, seizure, distress and execution."
 
Some lawyers take the position that Section 89(1.1) only permits realization of security on leasehold interests on designated lands, whether held by an Indian or a non-Indian. I believe that is too restrictive an interpretation of Section 89(1.1). As Section 89(1) only applies to property held by an Indian or a band, I believe Section 89(1.1) is intended to allow an Indian or a band to give an effective charge over a leasehold interest in designated lands.
 
As Section 89(1) does not apply to an interest in Reserve Lands held by a non-Indian, to interpret Section 89(1.1), which is prefaced by Notwithstanding subsection (1)", as applying to non-Indian interests in reserve lands is not, in my opinion, the legislative intent.
 
SURRENDERED OR DESIGNATED LANDS
 
With respect to Surrendered or Designated Lands, the Indian Act regulates surrenders and designations in Sections 37 to 41. Certain procedural requirements and formalities must be followed to allow the Band to validly surrender or designate land which is held by the Band for the purpose of leasing. Essentially the land is turned over to the Minister, either absolutely or conditionally for the purposes of leasing on behalf of the Band. In dealing with surrendered or designated lands, the actual surrender process should be examined to determine that it was valid as that is a precondition to being able to give an enforceable Lease.
 
Under Section 53(1), the Minister can lease, on behalf of the Band, designated or surrendered lands. Subject to the terms of the original surrender or designation and the wording of the Lease, and subject to the Minister's approval under Section 54, a tenant of Designated Land can mortgage or assign the leasehold interest. The security the Lender receives is the right to assume the position of the tenant for the balance of the Lease if the tenant defaults.
 
Because the Indian Act has specific statutory requirements for registration of any dealings with the designated lands or surrendered lands, a lending transaction involving such lands would require registration before any comfort with respect to the priority position could be obtained. This will mean that financing on surrendered or designated lands will take longer as the registration process in Ottawa often takes up to one month.
 
PROCEDURES AT THE REGISTRY
 
While the registers under the Indian Act are not public registers, Indian Affairs usually allows any party to search Abstracts which are arranged by Reserve name and a number. A copy of the registers is kept in the Vancouver Regional Office of Indian Affairs. For the most up-to-date list, however, it is recommended that the Registry in Ottawa be contacted and a Registered Assurance of Title be requested. The Assurance of Title issued by the Registrar is not in fact an assurance that the title is as set out on the Abstract, but simply provides a copy of the Abstract without any assurances as to whether the charges are valid or not. The Abstract will show all dealings with a parcel of land since the parcel was created by survey.
 
The Registrar normally examines each application in the order in which it is received and may require supporting documentation such as evidence of the Minister's approval or consent, evidence of consent of the Band Council, Band member or Band membership, evidence of an absolute surrender or designation vote, or a copy of the survey plan (unless it is already registered in the CLSR).
 
Although not mandated by statute, the Indian Lands Registry has developed its own registration manual which is followed as a matter of policy. The requirements set out in this manual must be followed or a document may be rejected when application is made for registration. Although the Registrar normally deals with applications in the order in which they are submitted, it is possible that an application which does not meet the procedural requirements of the registration manual could be rejected or set aside until the requirements are met and other documents processed in the meantime. This would have some effect on priority of security when dealing with designated or surrendered lands because of the statutory provision that gives priority to registered interests over unregistered interests, but would not necessarily affect dealings in locatee lands, which are not statutorily required to be registered and do not have a system of statutory priority in any event.
 
Once a document is registered at the Indian Lands Registry, a stamp is placed on the back of the document signed by the Registrar indicating the date and the number under which the document is registered, and the Abstract is updated.
 
DEALING ON WESTBANK INDIAN BAND LANDS

The Westbank Indian Band has delegated land management authority pursuant to Sections 53 and 60 of the Indian Act, whereby documents are approved and consented to by the Westbank Indian Band Council on behalf of the Minister. As a result of being able to deal directly with the Band, the time required to obtain consent and registration is greatly reduced. Also, the Westbank Indian Band lands staff can provide up to date information because the Band has strict administrative procedures that must be adhered to prior to execution of any land related documents and has a tracking system of documents submitted for registration. The administrative procedures include:

all requests for signatures by Council on behalf of the Minister must be:
i) accompanied by a duly executed Council resolution; and
ii) recommended for execution by the Band's land staff;

Once a document has been signed by Council, the details of the transaction are noted on the Band's lands records (Abstracts) as a transaction pending registration in the Indian Land Registry;
the Band's lands staff complete the application for registration and submit the documents to the Indian Lands Registry. Executed documents will not be returned to another party for forwarding for registration. The Indian Land Registry has been advised not to accept documents for registration unless they have been submitted by the Band (caveats are an exception to this);
copies of all transactions and corresponding applications for registration are kept on file;
upon receipt of registration details, all Band land records are updated. The Band has indicated that they can provide a statement that according to their records, the Band, on behalf of the Minister, has not consented to any other encumbrances or assignments since the last entry on the Abstract which affects the specific parcel in question.
Because the Westbank Indian Band has the powers of the Minister with respect to consenting to documents and with respect to management of its lands, certain assurances and revisions to contracts are available that would not be available when dealing with lands which are directly under the control of the Department of Indian Affairs.