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A step toward better native housing
By Tanis Fiss
The National
Post
Mar. 16, 2005
Millions of Canadians take the right to buy and
sell their own home for granted. Yet on Canada's reserves, where
land is held communally, aboriginals have been systematically
denied this fundamental economic right for generations. In this
second of her four-part series, Tanis Fiss explains the benefits
of Certificates of Possession, a mechanism some reserves have
adopted in response to Canada's obsolete native land-use policy.
Pride of ownership provides a powerful motivation
for individuals to improve their property. It explains why homeowners
are willing to spend their time and money mowing their lawns and
fixing their houses: The property is theirs and theirs alone.
They own it in "fee simple" -- that is to say, outright. As the
expression goes, no one ever paid money to wash a rented car.
As a visit to a typical Canadian reserve reveals,
such pride of ownership is absent in many native communities.
Housing is dilapidated and there is little evidence that occupants
care much about their properties.
Needless to say, this is not a reflection of aboriginals
themselves, but rather an indictment of our government's native
policy: Federal law does not permit those who live on Indian reserves
to own their homes in fee simple. Since they cannot sell their
houses to recover their investments, residents have no incentive
to spend money on improvements. For the same reason, there is
no reason for housing developers and other entrepreneurs to create
new building stock for private buyers.
This explains why a 2003 federal Auditor-General's
(AG) report found there was a shortage of 8,500 houses on Canada's
Indian reserves -- despite the fact the federal government spent
$3.8-billion over the past decade on native housing.
As things currently operate, the Department of
Indian Affairs and the Canada Mortgage and Housing Corporation
(CMHC) transfer federal housing money directly to native band
councils. From there, it is up to the chief and council to determine
who gets a new house or repairs. As one would expect in any system
in which material benefits are dolled out by unaccountable leaders,
bald-faced favouritism is common. In many cases, reserve residents
complain, one must be connected to the band council in some way
in order to obtain new or improved housing.
Even well-intentioned native leaders have difficulty
fulfilling their oversight responsibilities. For instance, band
councils are supposed to ensure that any new housing meets National
Building Code standards. But bands often have no way to ensure
new housing meets these codes, which helps explain the high percentage
of substandard housing.
The average non-native homeowner can walk away
from a housing purchase if the dwelling is poorly constructed:
In a free market, he has a thousand other homes from which to
choose. But on reserves, residents have no such choice: Like the
citizens of some bygone communist regime, they must take what
their political masters give them, whether it's falling apart
or not.
Because fee-simple ownership of reserve land is
forbidden, systems of what may be called "quasi-ownership" have
emerged. One such system, customary rights, was discussed in yesterday's
column (along with its various flaws). Another more promising
alternative is the allotment of "Certificates of Possession" (COP).
When a band issues a COP, the landholder is deemed to have an
interest in the property he inhabits. This interest may then be
used to apply for mortgage financing, which, as noted yesterday,
is otherwise unavailable to reserve residents.
In return for a loan, a holder of a COP transfers
his certificate back to the issuing band as collateral. The band
then enters into an agreement with CMHC by which it pledges to
assume the mortgage in the event of a default. Since COP holders
can be dispossessed if they do not meet their repayment schedule,
they will generally be motivated to comply with the terms of their
loan. Once the mortgage is paid off, the certificate is transferred
back to the individual.
Certificates of Possession are a stronger and
more valuable form of property rights than customary or hereditary
ownership: Canadian courts will enforce the rights and obligations
associated with COPs, whereas they typically will not in the case
of customary rights. And since land held under a COP can be subdivided,
left to an heir or sold to another person having a right to reside
on that reserve, certificate holders tend to assume the mindset
and habits of a true property owner.
Many native bands across Canada have been motivated
to issue Certificates of Possession because they are a means to
bring more money to the reserve. Moreover, the economic value
that inheres to COPs provides an enticement for younger band members
to stay on-reserve. In some parts of Canada, internal real estate
markets powered by COPs are thriving. The Six Nations band in
Ontario, for instance, has issued over 10,000 COPs.
In sum, Certificates of Possession are win-win-win:
Bands are able to secure more income, residents become eligible
for mortgage financing and Canadian taxpayers are relieved of
some of the burden associated with the constant replenishment
of native housing stock. One can only hope that more of Canada's
reserves follow the example of the Six Nations band.
©
National Post
2005
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