Casual Legal: Questions to ask when selling municipally-held land

DISCLAIMER: This article is meant to provide information only and is not intended to provide legal advice. You should seek the advice of legal counsel to address your specific set of circumstances. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this article to be outdated. 

By Ben Throndson 

Reynolds Mirth Richards Farmer LLP 

Alberta Municipalities Casual Legal Service Provider  

Selling real estate is an important and routine part of municipal government business in Alberta. This article flags some important questions that a municipality may wish to ask itself when preparing to sell land.  

• Is there a purchase contract in place? Even “basic” land transactions can go sideways. Having a properly prepared contract helps to limit risk by setting out the obligations of both buyer and seller. This is especially important on municipal transactions as public funds and resources are at stake.
• Is this a transfer below market value? If a municipality proposes to transfer real estate for less than its market value, the proposal must be advertised in advance in accordance with the MGA. The municipality should have a reasonable basis for its assessment of market value.
• Does the municipality expect the buyer to consolidate the parcel, or to build upon it within a particular timeline? If the municipality will require the purchaser to consolidate the purchased lands with an adjacent parcel by a certain date, or to commence construction by a particular deadline, it is important to set out those deadlines in the purchase contract. There are also legal tools (such as option-to-reacquire agreements allowing the municipality to buy back the land) which can help motivate a buyer to meet those deadlines after the purchase has closed.
• Does this sale require a road closure? While closed roads may be sold to private buyers, there are specific processes in the MGA for road closures that must be followed exactly. Depending on the circumstances, ministerial approval from the Minister of Transportation and Economic Corridors may be required. The purchase contract should allow sufficient time for these statutory processes to be completed.
• Is this a tax sale? The MGA contains a detailed set of provisions that set out how tax sales are to be conducted and how municipalities must use and account for the sale proceeds.   

Further, the Municipal Government Act (MGA) imposes other requirements on sales of municipal land that do not apply to private vendors. All said, every transaction is different and should be approached with care and an eye for detail. 

To access Alberta Municipalities Casual Legal Helpline, Alberta Municipalities members can call toll-free to 1.800.661.7673 or email casuallegal [at] abmunis.ca (casuallegal[at]abmunis[dot]ca) and reach the municipal legal experts at Reynolds Mirth Richards and Farmer LLP. For more information on the Casual Legal Service, please contact riskcontrol [at] abmunis.ca (riskcontrol[at]abmunis[dot]ca), or call 310.MUNI (6864) to speak to Alberta Municipalities Risk Management staff. Any Regular or Associate member of Alberta Municipalities can access the Casual Legal Service.