What the heck are 'restrictive covenants' and how do they affect Calgary's housing situation?

If you think you can do whatever you want with your own property, your land title may beg to differ.

Dave Robertson learned this the hard way.

Years ago, the Calgary resident went to city council to apply for a rezoning permit in order to build a backyard suite behind the bungalow where he lives with his wife. They planned to rent their existing house and make the small, secondary dwelling their retirement home.

City council approved their re-zoning application in October 2015. (This was before Calgary made secondary suites more broadly permitted by default.) These types of applications were often controversial but theirs passed by healthy 13-1 vote in favour. It helped that Robertson had the blessing of his immediate neighbours to go ahead with the project.

Everything seemed on track, until the couple started looking deeper into what they initially thought would be a niggling detail: the restrictive covenant registered on their land title. They believed the document, which dated back to the 1950s and forbade the construction of secondary dwellings, would have little relevance in the context of a project that met all the city's legal requirements in the 21st century.

They were wrong.

"The lawyers that we spoke to felt that there was a substantial risk that we would spend a lot of money on legal fees — you know, in excess of $10,000 — and that, in fact, our odds of actually having the the covenant relaxed at that time were less than 50 per cent," Robertson said.

They ended up abandoning the project. The financial risk was simply too great.

Robertson hopes others can learn from his experience. And he believes it has renewed relevance today, as the City of Calgary looks to address an affordable housing crisis by pressing forward with a new housing strategy that may include blanket rezoning, which would make it easier to build duplexes and row houses throughout the city.

He wants Calgarians to know that, even if the city permits higher-density housing in a particular area, restrictive covenants can still stand in the way.

What the heck is a restrictive covenant, anyway?

Restrictive covenants are binding, legal agreements that are attached to property titles. They restrict what the owner of a property can do with the land and, in some cases, also put obligations on the property owner.

When you buy a property with a covenant attached, you take on all those restrictions and obligations. In many cases, the covenants continue to apply no matter how many times the property changes hands.

Many older covenants were created when lands were initially subdivided. Prior to municipal governments taking on the power of land-use zoning, they were a primary tool to organize towns and cities.

Broadly speaking, covenants helped separate residential development from commercial and industrial development. But they also delved into more minute development rules aimed at fostering the character of a community, including restrictions on the size and appearance of buildings and the types of activities allowed.

The same covenant would typically be applied to numerous subdivided properties in a given area, with the goal of creating a predictable and orderly neighbourhood for prospective homebuyers. In essence, anyone who bought a property had to agree to abide by the covenant and to transfer the covenant along with the land title if they ever sold the property to someone else.

A covenant on one property would typically be bound to other properties with the same covenant. If one property owner were to violate the covenant, any of the other property owners could take them to court. Dozens of people — sometimes hundreds — could all be party to the same covenant, each potentially poised to enforce the rules on everyone else.

People who have spent careers studying or dealing with restrictive covenants say they are more common than many people realize. But for the most part, they remain an arcane aspect of property law that often conflicts with intuitive understandings of individual rights, especially now that municipal governments play a primary role in land-use planning and enforcement.

People who encounter covenants for the first time are often surprised at just how powerful — and enduring — they can be. Unless they come with a specified expiry date, they can exist in perpetuity on a land title, meaning private agreements made at any time in the past can bind all future owners of that land, in theory, forever.

That said, they are not all-powerful. Covenants can be discarded if all interested parties agree they no longer want them. They can also be simply ignored, in the hope that no one will bother trying to enforce them, but that can be a risky strategy — especially when it comes to major development projects.

Courts can also discharge covenants on a variety of legal grounds. But some covenants are much harder to get rid of than others. The exact wording of a covenant and the context in which it currently exists will affect the likelihood that a court will agree to lift it.

Like condo rules, kind of

Unlike municipal zoning bylaws, the city doesn't enforce restrictive covenants. They exist in the realm of private law and conflicts are addressed in civil court.

"Most people would be familiar with private law, in that way, if they've ever lived in a condo," said Eliot Tretter, a geography professor at the University of Calgary who specializes in the history of restrictive covenants.

"The legal basis for condos and condo bylaws is restrictive covenants."

So, in the same way that a condo bylaw might restrict renting out a suite on Airbnb, a restrictive covenant might restrict the use of a detached house for commercial purposes. (In theory, that could include Airbnb rentals, even if the original authors of the covenant would have had no idea what Airbnb is.)

Tretter said home-based businesses actually do get caught up in restrictive covenants fairly often, as commercial use of residential properties is a common restriction.

Restrictive covenants are not unique to Calgary, or Alberta, or even Canada. Tretter said they have a long and sometimes sordid history in other countries, including the United States, where they were at times used as tools for racial segregation.

Not all restrictive covenants are vestiges of history, however.

Modern covenants

Today, the same legal mechanism behind restrictive covenants forms the basis for the residents associations (also known as homeowners associations) that are common in new Calgary suburbs.

This allows the associations to collect the mandatory fees they charge to property owners and use to maintain shared amenities in the community. It also allows them to enforce various rules, typically related to neighbourhood character, that were agreed upon when the lands were initially subdivided.

Some residents have also sought to voluntarily enter into restrictive covenants with their neighbours as a way to shield their properties from land-use changes brought forward by the municipal government that they disagree with.

Restrictive covenants can also be applied to commercial properties. Grocery chains, in particular, have historically used them to limit competition by attaching covenants on or near their own stores that preclude other grocers, butchers, bakers or florists from opening up shop.

The practice has been a long-standing source of controversy in Edmonton, with opponents arguing it has reduced the accessibility of healthy food options and even led to "food deserts" in some areas. Similar concerns have been raised in the United States.

But in Calgary, it's in the residential sector where covenants may soon lead to more and more controversy, as decades-old restrictions run into modern efforts to increase both the density and affordability of housing.

Old covenants vs. new city planning

While restrictive covenants are not unique to Alberta, Section 48 of Alberta's Land Titles Act spells out the precise legal basis upon which they operate here.

Randi Collins, a Calgary real estate lawyer, says a section of the act does deal with potential conflicts between old covenants and modern municipal land-use planning.

"That section essentially says that in the event a restrictive covenant conflicts with a land use bylaw and it's in the public interest to remove that restrictive covenant, a court application could be made to remove that restrictive covenant," she said.

This scenario played out recently in a protracted battle over covenants and density in the community of Banff Trail.

An application was made to vacate the covenants on properties along 24th Avenue N.W., so they could be redeveloped into townhouses and apartment blocks. The covenants were placed on land titles in the area in 1952 (which, by a quirk of history, applied to properties to the south of 24th Avenue but not to the north of the roadway).

Some area residents objected, however, and the dispute went on for years, ultimately landing in court.

In a decision rendered in August 2022, a Court of King's Bench justice agreed to vacate the covenant in some areas but not in others.

The decision turned on the fact that the covenant — which allowed "only one single or two family dwelling house" per property — was incompatible with the municipal zoning rules in some areas, where the city had imposed a minimum density requirement that didn't allow for single family homes.

In other areas, where single family homes were permitted, the covenant was maintained because it wasn't in full, direct conflict with the city's zoning rules.

The decision was appealed and is still before the courts, leaving proposed projects in limbo.

Collision course

Kathryn Davies, a former director with the Banff Trail Community Association, believes the conflict over covenants in her community will likely play out in other areas, too, as the City of Calgary looks to implement its new housing strategy and encourage more multi-family housing in places where single-family homes were once the norm.

While there is no comprehensive list or database of restrictive covenants, Davies says they are known to exist in numerous Calgary communities where higher-density housing will likely be proposed, and she believes that will throw up roadblocks to redevelopment projects that could help ease the affordable housing crisis. 

"If you think of hundreds of units of housing going unbuilt in Banff Trail, multiply that by however many neighbourhoods there are [with covenants] and then compare that to how many housing units we need," she said.

Given how long it takes to discharge covenants through the courts, she would like to see the provincial government amend the Land Titles Act to give modern land-use planning more weight when conflicts arise.

Tim Bardsley also foresees a collision course between restrictive covenants and the city's new housing strategy. He's a former city councillor and a retired lawyer who specialized in restrictive covenants during his career.

He personally believes land-use decisions are better made in the public sphere of municipal politics than in the often esoteric world of civil court. But he also understands why people who might have based a purchase decision, at least in part, on the covenants attached to a property would be upset if those agreements were threatened or undermined.

"That's really what it comes down to, for me: Who should be making these decisions in the here and now? Should it be elected representatives, or some hangover from the 19th century? You're going to get different opinions on that."