Navigating Land Codes and Financing on First Nations Land in British Columbia

[ Photo by Conventional Homes on Unsplash ]

Understanding the unique aspects of First Nations real estate, particularly with respect to the implementation of the Framework Agreement on First Nations Land Management Act (FAFNLMA) and related land codes, is crucial for anyone involved in real property transactions within First Nations’ reserve lands. This blog aims to provide a clear and professional overview of these topics and the key considerations for financing development on these lands, particularly in the context of a First Nation band that has signed on to the Framework Agreement under the FAFNLMA.

Framework Agreement on First Nations Land Management Act (FAFNLMA) and Land Codes

The FAFNLMA is a pivotal piece of legislation that allows First Nations to opt out of certain land tenure and management provisions of the Indian Act and instead govern their lands through their own “Land Codes.” A land code is the legal document that, once enacted by the First Nation, grants authority to the First Nation over land, environment, and natural resources within the First Nation’s reserve lands. A Land Code functions as the First Nation’s land law, and often includes provisions about how to create a valid instrument  within the First Nation’s reserve lands, including leases and mortgages. Not every Land Code is the same and it is crucial to review and understand the various requirements and procedures of each First Nation and their respective Land Code.

As of May 21, 2024, there are 114 operational Land Code First Nations, 87 of which are in British Columbia. These Land Codes replace the land management provisions of the Indian Act, giving First Nations the ability to determine procedures for granting interests in land to both members and third parties, establish rules and procedures for the use and occupation of reserve lands, and create provisions for financial accountability for revenues generated from reserve lands.

Financing Development on First Nations Lands

Financing development on First Nations land involves unique due diligence and considerations to ensure that leases contain the necessary provisions to be financeable, meaning they are acceptable to lenders as collateral for loans. A financeable lease includes several provisions, including:

1. All rent under the lease is fully pre-paid;
2. The lease may be financed or assigned without consent;
3. Lenders are entitled to notice of default and an opportunity to cure any default of the tenant under the lease; and
4. The lease term exceeds the loan term by at least five years. Including these provisions in a lease, among others, ensures that lenders are protected when providing financing for projects on First Nations land.

Conclusion

Navigating real estate transactions on First Nations land involves understanding specific laws and regulations, particularly the FAFNLMA and Land Codes. At Waterstone, we can help you successfully engage in real property transactions on reserve lands while honoring the unique legal and cultural contexts of First Nations communities.

If you have any questions or need further assistance, please contact our real estate transactions group.