Leasehold Land on a First Nations Reserve in BC: Can You Get a Mortgage?

Buying a home on a First Nations reserve, or on Nisga'a or treaty land, can work quite differently from buying an ordinary house in a BC city, because different rules govern the land. Title often comes as a certificate of possession, a lease or a right to use the land granted by the First Nation, and that affects what a lender can take as security.

This article explains the basic legal reasons mortgages work differently there and what financing routes exist. Lender policies and each nation's land rules vary, so confirm the details with the lender and the First Nation's land office.

This article covers the law of British Columbia.

Why reserve land is different

Under s. 89(1) of the Indian 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 in favour of anyone other than an Indian or a band. How this applies to a particular home depends on how the land is held, so it is worth confirming with a lawyer and your lender.

There is an exception. Section 89(1.1) says that despite s. 89(1), a leasehold interest in designated lands is subject to charge, pledge, mortgage, attachment, levy, seizure, distress and execution. That is why leasehold interests on designated reserve land can be mortgaged by outside lenders.

Financing a home on reserve

On-reserve housing loans from approved lenders are generally secured by a band council resolution and a ministerial loan guarantee from Indigenous Services Canada. The borrower must hold a certificate of possession or have been granted use of the land by the First Nation.

If the borrower cannot repay a ministerially guaranteed loan, the lender is paid the outstanding balance and Indigenous Services Canada then seeks repayment from the First Nation. This is one reason the First Nation's council has to be involved. The CMHC program page also says a homebuyer needs savings equal to at least 5% of the loan's value and directs buyers to seek further housing guidance.

Whether a particular lender will accept a leasehold, how long the lease must run and what land code requirements apply vary. Get the lender's written requirements early.

Nisga'a Lands and treaty lands

Nisga'a Lands are owned by the Nisga'a Nation in fee simple. They are protected from seizure and sale except under an instrument, including a mortgage or other security, granted by the Nisga'a Nation or a Nisga'a Village, or as allowed under a Nisga'a Lisims Government law.

The provincial Torrens system does not apply to a parcel unless an indefeasible title application has been made. In practice that means you cannot assume you will find a normal BC land title record, and a search of the Land Title Office may not show the whole picture.

Treaty lands are governed by each treaty and the nation's own laws, not by the Indian Act. Because the rules differ nation by nation, speak to the nation's land office.

For transfers of treaty land, self-governing First Nation land or reserve land, no Land Owner Transparency Act declaration is needed. Instead the applicant submits a Declaration of Exclusion with the application.

Comparing the main routes

Treat this table as a starting point. Lender acceptance and lease terms depend on the specific lender, nation and parcel.

What to do next

• Ask the First Nation's land office what interest the seller holds and how it can be transferred.
• Get a copy of the certificate of possession, lease or land use grant and read the terms.
• Ask your lender in writing whether it finances this type of interest and what documents it needs.
• Ask whether a band council resolution and ministerial loan guarantee are needed.
• Have a lawyer review the lease, the transfer approvals and any conditions before you remove your subjects.

Allow extra time. Approvals from the First Nation, and from Indigenous Services Canada where it is involved, can lengthen the usual closing timeline.

Frequently asked questions