Casual legal: section 70 sales of 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made to provide current and accurate information, changes to the law may cause the information in this article to be outdated.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 Sean Ward
Reynolds Mirth Richards Farmer LLP
Alberta Municipalities Casual Legal Service Provider
Any time a municipality plans to sell land for less than market value, section 70 of the Municipal Government Act first requires a municipality to advertise the proposal to transfer land. “Market value” for the purpose of the MGA means the amount that a property might be expected to realize if it is sold on the open market by a willing seller to a willing buyer.
However, it is important to note that section 70 applies to situations beyond a municipality proposing to transfer ownership of land for less than market value.
Firstly, section 70 also applies any time the municipality wishes to grant an estate or interest in land for less than market value. This means any time a municipality proposes to lease any of its land to another party, if the lease rate does not reflect market value, the proposal must also be advertised.
Similarly, an option to purchase would constitute an interest in land. So if a municipality grants another party an option to purchase land in the future, it is important to consider whether section 70 would apply. Granting an option to purchase for nominal consideration (such as $1) would likely not reflect market value and therefore ordinarily require first advertising the proposal to grant that interest in land.
There are some agreements a municipality could enter into in relation to land that would not amount to an “estate or interest in land”, such as a non-exclusive license agreement to use the land for some period of time. However, simply calling something a license agreement is not determinative; where it grants exclusive use in the nature of a lease agreement, it could be considered an interest in land where consideration should be given to section 70.
It is also important to note that even if the interest the municipality proposes to grant is for market value, section 70 will still require the proposal to be advertised if it relates to “a public park or recreation or exhibition grounds.” Those terms are not defined in the MGA, but they would not be restricted to municipal reserve lands where the MGA has a separate process to deal with the disposal reserve lands. Any time a municipality is selling or proposing to lease or grant some other interest in lands that could be considered a park, recreation or exhibition grounds, the proposal may also need to be advertised.
There are exceptions in section 70 providing that a proposal does not need to be advertised if the estate or interest in land will be used by a non-profit organization or for the purpose of supplying a public utility, or is transferred or granted in connection with the tax recovery process under the Act. Otherwise, however, municipalities should carefully consider whether section 70 applies such that the proposal will first have to be advertised and therefore subject to a petition under section 231 of the MGA.
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.
