Reserve land lease (Indian Act designated lands)

Some businesses operate from premises on First Nations reserve land that is leased to them. A buyer meets this when the lease is the main right that comes with the premises. The lease review has to deal with the federal rules for that land, not only the lease wording.

What the sources say

The Indian Act defines designated lands as a tract of land, or an interest in it, whose legal title stays vested in Her Majesty and in which the band has, otherwise than absolutely, released or surrendered its rights or interests. Section 89(1.1) says that, notwithstanding subsection 89(1), a leasehold interest in designated lands is subject to charge, pledge, mortgage, attachment, levy, seizure, distress and execution. Indigenous Services Canada’s leasing policy says a lease in good standing may be assigned if its terms allow, and that an assignment is not valid until the lessee, the new lessee, the department and the Band Council, if the Band is a contracting party, sign an assignment consent agreement.

What to check or ask

• Whether the lease allows assignment and what the department requires
• Whether the lease is in good standing
• What the lender and the Band Council need to sign