Rescinded [2006-11-01] - Treasury Board Policy on the Disposal of Surplus Real Property

Federal government properties no longer required for program purposes can be disposed of by sale or transfer, which is subject to routine or strategic process.
Date modified: 2008-05-21

This page has been archived on the Web

Information identified as archived is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.


This policy is replaced by:

View all inactive instruments
Print-friendly XML

Note to reader

Notice to the reader: As of November 1st 2006, this document is no longer in effect. It has been archived online and is kept purely for historical purposes. New Assets and Acquired Services Policy Instruments are now in effect.

1. Effective date

This policy takes effect July 1, 2001.

2. Introduction

When federal government properties are no longer required for program purposes, the disposal of these surplus properties by sale or transfer is subject to one of two processes: routine or strategic. Both processes are designed to ensure the best outcome for all Canadians.

3. Policy objective

The objective of this policy is to establish a system for the disposal of surplus real properties that ensures

  1. efficiency, equity, fairness, and transparency in disposals;
  2. consideration of the interests of communities and other levels of government;
  3. the best value to the Canadian taxpayer; and
  4. consideration of all relevant government policy and other strategic concerns of government.

Note: For interpretation of this policy in the Province of Quebec, "real property" means "immovable" within the meaning of civil law of the Province of Quebec and includes the rights of a lessee in respect of such an immovable.

4. Policy statement

It is government policy that real property no longer required by departments for program delivery purposes be sold or transferred at market value.

5. Disposal processes

The disposal process for surplus federal real property is divided into two broad types: routine and strategic.

5.1 Routine disposal

Surplus real properties subject to routine disposal are generally properties or a portfolio of properties with lesser value that can be sold easily without any substantial investment. These properties are normally sold in their "as is" state on the open market by the custodian, its agent (Public Works and Government Services Canada), or a private sector firm. "As is" transactions imply that there is limited potential for increasing the value of the property prior to sale or transfer and that there are no strategic interests in the property.

5.2 Strategic disposal

Surplus real properties subject to strategic disposal are properties or portfolios of properties with potential for significantly enhanced value, those that are highly sensitive, or a combination of these factors. Because of the complexity associated with these properties, they may require innovative efforts and a comprehensive management approach to move them into the market. Canada Lands Company CLC Limited, as the government's disposal agent, disposes of these selected surplus properties through a strategic disposal process.

6. Application

This policy applies to all departments within the meaning of section 2 of the Financial Administration Act unless specific acts or regulations override it or unless otherwise exempted.

7. Policy requirements

Note: All policy requirements apply to both categories of disposal unless specifically noted otherwise. Where policy requirements entail separate, more detailed policies, an electronic link has been provided to the Treasury Board of Canada Secretariat Web site.

7.1 Departments shall ensure that disposal decisions are based on an economic and program analysis that fully considers the costs and benefits of disposal.

7.2 Departments will dispose of real property in a manner consistent with the principle of sustainable development and will dispose of federal buildings in a manner that protects their heritage character.

Nature of the disposal

7.3 Departments will work with the Treasury Board of Canada Secretariat to identify surplus properties in Canada that should be subject to a strategic disposal process and would therefore be sold to the CLC. Meeting one or more of the following conditions would mean that a surplus property should be considered for sale to the CLC:

  1. The size or value of the property, or of a portfolio of properties, is significant enough to affect local markets negatively should its integration into the market not be managed.
  2. The value of the property, or properties within a portfolio, can be increased significantly (for example, through subdivision, rezoning, or investment or pre-sale development), producing the best return for Canadians.
  3. A partnership with another level of government, the private sector, or other party may offer the best mechanism to realize either the inherent value of a particular property or portfolio of properties or the greatest benefits to the government beyond the financial return.
  4. There are sensitive policy issues, including the potential for a substantial gain by a third party instead of the government.

7.4 All other surplus properties are to be disposed of following the routine process.

Sale or transfer of federal properties

7.5 Departments will ensure that the Treasury Board of Canada Secretariat and other interested parties are aware of their intention to dispose of properties as follows:

Routine process

  1. Federal real property that is being offered for sale must first be offered simultaneously to federal custodial departments, agent Crown corporations, provincial governments, and municipal governments. These agencies will be permitted to acquire such real property for public purposes on a priority basis in the order noted above. Whenever there is the potential for the priority purchaser to rezone and resell the real property for profit, however, the conveyance or transfer documents must include appropriate covenants to ensure that the original intent of the transfer is respected.
  2. Whenever possible, notices of available real property will be circulated far in advance of the date the property is available for possession by the purchaser. Priority purchasers who wish to avail themselves of the opportunity to acquire federal real property for public purposes must agree to the transfer or sale, in writing, within 120 days of the deadline specified in the notice. The final transfer or sale must be completed as soon as possible thereafter.
  3. Where the Department of Indian and Northern Affairs wishes to acquire federal real property on a priority basis, to be used for the settlement of comprehensive land claims, the department must agree to the transfer of administration of the real property, in writing, within 240 days of the deadline specified in the notice. The final transfer of administration must be completed as soon as possible thereafter.

    Strategic process

  4. Properties subject to a strategic disposal process are not offered for sale or transfer on a priority basis. Program departments, agent Crown corporations, and other levels of government are canvassed to identify issues or program interests in the specific property. This information is taken into consideration during the strategic assessment phase of the process, as detailed in the attached Appendix B.
  5. The interests of government agencies should be identified as soon as possible in the process. Written confirmation of the nature and scope of the interest must be provided within the 120 and 240 day timelines noted above.

7.6 Under the routine disposal process, where a surplus property is not being acquired by a priority interest, departments must provide the public with a fair and equitable opportunity to acquire the real property from the government.

7.7 Mineral rights, when held as part of the fee simple interest (ownership), must not be conveyed unless this is authorized by Natural Resources Canada (NRCan). All retained rights must be transferred to NRCan without charge. All dispositions of mineral rights must be made through NRCan.

7.8 Sale or transfer pricing

  1. Departments are responsible for ensuring that the total consideration received by the government is justified in relation to the market value of the surplus real property. Departments must use independent third-party appraisals in accordance with the related policies.
  2. For potential sales of surplus properties to CLC, in addition to the requirement to obtain an independent third-party appraisal, departments are also responsible for obtaining a business plan from the CLC that demonstrates the CLC's ability to enhance value significantly or that outlines its plan to address other strategic considerations jointly identified by the custodian and Treasury Board of Canada Secretariat, or that does both, as applicable.
  3. To ensure optimum value to the Crown overall, departments will use the independent third-party appraisal and the CLC business plan to develop the business case on which a decision will be based, either to proceed with a sale to CLC, treat the disposal as routine, or take another course of action. The business case will also be used to determine the final sale price of a surplus property or portfolio of properties.

8. Proceeds of sale or transfer

All proceeds from the sale or transfer of real property must be credited to the Consolidated Revenue Fund (CRF). In the case of a sale to the CLC, the Corporation issues a project-specific, non-interest-bearing promissory note to the Receiver General for Canada, in lieu of payment in cash at the time of sale. This note is recorded as accounts receivable in the government's book in accordance with established financial policy and practices. Note repayments are also credited to the CRF.

The Treasury Board has authorized the sharing of 100 per cent of net proceeds from the sale or transfer. Departments will seek access to their share of net proceeds from the sale or transfer of surplus properties through the established Annual Reference Level Update (ARLU) process. To have access to the proceeds, departments must have a strategic investment framework approved by Treasury Board (e.g., a Long-Term Capital Plan) and invest the proceeds in real property. In addition, departments must have satisfied the reporting requirements to the Directory of Federal Real Property (DFRP). Requests can be made to re-apportion the proceeds and consideration of such requests will be based on affordability constraints.

9. Delegations

Levels of ministerial delegation vary for routine and strategic disposals, as described in the Real Property Transactions Processes and Authorities Policy.

10. Responsibilities

Treasury Board of Canada Secretariat, on behalf of the Treasury Board, provides leadership and co-ordination in ensuring that surplus real property is disposed of in a manner consistent with this policy. The Secretariat also develops related policies and monitors the performance indicators for the disposal process.

Custodial departments are those that have administration of real property to deliver their programs. They are responsible for developing and following strategic plans to relate their real property to program delivery. Custodial departments are required to determine whether a particular real property is surplus to program needs and, in this case, must dispose of it by sale or transfer. They are accountable for initiating and implementing all disposal actions. This includes accountability for making the business case for disposing of a surplus property in accordance with a routine or strategic process, whether they handle the disposal themselves or have an agent do it for them.

The Department of Justice Canada ensures that all legal aspects of any proposed real property disposal transaction, as identified through the due diligence review, have been dealt with. As well, the Department of Justice Canada is responsible for the preparation of all necessary conveyancing documents, including their settlement and approval as to form and legal content.

Public Works and Government Services Canada (PWGSC), in addition to its role as a custodian, is the common service organization that offers a variety of real property services to departments, including disposing of real property within Canada, on an "as is" basis.

Canada Lands Company CLC Limited is the real estate subsidiary of Canada Lands Company Limited, a federal, non-agent Crown corporation mandated by Cabinet in 1995 to dispose of selected surplus federal properties in Canada on behalf of the government. One of the fundamental purposes of Canada Lands Company Limited is to assure the commercially oriented, orderly disposition of selected surplus properties, obtaining the best value for the Canadian taxpayer.

National Capital Commission (NCC) has legislated responsibilities for real property within the National Capital Region (NCR), including the approval of all sales or transfers of federal lands within the NCR and the approval of land use or development plans. The NCC is also responsible for defining the National Interest Land Mass (NILM) - those lands essential to the function and character of the NCR that shall be held for future generations.

Natural Resources Canada issues, manages, transfers, and registers federally owned mineral rights in the provinces and oil and gas rights for frontier land areas not covered by regional boards. Therefore, it has a role to play in the disposition of real property whenever mineral rights form part of the federal "ownership" of the land.

The Department of Foreign Affairs and International Trade (DFAIT) is the custodian of federal real property used for diplomatic and consular purposes outside Canada. For real property requirements other than those for diplomatic and consular purposes, DFAIT will, at its discretion, act as custodian or provide property-related services, including disposal, where departments request it.

11. Monitoring

The Secretariat will determine how effective this policy is, find out how it is applied in departments, and decide whether it needs to be revised. It will do this through ongoing contact and committee work with departments, including the Treasury Board Advisory Committee on Real Property, reviewing departmental strategic investment frameworks (e.g. Long-Term Capital Plan), developing Urban or Regional Overviews, and through the review of audits and reviews conducted by departments or the Auditor General of Canada.

The policy will be reviewed within three years from the date of issuance. The Treasury Board Guide to Monitoring Real Property Management provides information to assist departments in monitoring and assessing policy implementation.

12. References

12.1 Authority

This policy is issued pursuant to the Financial Administration Act, subsections 7(1), 9(1.1), and 9(2), and the Federal Real Property and Federal Immovables Act, subsection 16(4).

12.2 Treasury Board publications

13. Enquiries

Please direct enquiries about this policy to your departmental headquarters.

For interpretation of this policy, departmental headquarters should contact:

Real Property and Materiel Policy Directorate
Treasury Board of Canada Secretariat
140 O'Connor Street
Ottawa ON K1A 0G5
Telephone: (613) 941-7173
Facsimile: (613) 957-2405

Appendix A - Federal Real Property Disposal Processes

Federal Real Property Disposal System Processes and Decision Points graphic

Display full size graphic

NB 1 The custodian must obtain a clear indication of any significant legal issues regarding title from the Department of Justice Canada, prior to proceeding further.

NB 2 See Open and Fair Transaction Policy, Appendix C - Appraisals and estimates.

NB 3 Custodian access to revenue through ARLU linked to TB approved strategic investment framework

Appendix B - Components of the Strategic Disposal Process

The strategic disposal process covers the period from the time the custodial department declares that the property in Canada is or will no longer be required for program purposes to the point of transfer or sale, with the expectation that the sale will be to the government corporation responsible for disposal, Canada Lands Company CLC Limited (CLC). The process generally has two phases needed to manage key risk factors associated with the project.

The activities of the first phase are carried out by the custodian, in consultation with stakeholders, and include the preparation of a strategic assessment document. This document

  • reports on the results of legal studies (including Aboriginal rights and title) and technical analysis, such as environmental studies;
  • identifies and briefly assesses all federal and non-federal stakeholder interests, including those of Aboriginal groups;
  • identifies federal government policy and other strategic considerations; for example, comprehensive or specific land claims and environment or heritage issues;
  • includes an assessment of the risk to the integrity of the program that the property supported;
  • provides a plan for the department's phased removal from the site and interim use until final transfer or sale;
  • describes the interests, if any, of the provincial and municipal governments with respect to the property and its future use; and
  • identifies potential financial return on disposal, based on the independent third-party appraisal as a baseline value and the costs of preparing for disposition, and outlines strategies for managing cases where the cost is expected to exceed the return.

The activities of the first phase also include the designation of a federal government spokesperson for high-profile projects and the development of a communications plan or strategy to respond to questions and concerns, as appropriate.

In the first phase, the CLC must produce a business plan that demonstrates the corporation's ability to enhance the value significantly or to respond to other social or economic policy requirements and provide related benefits to Canadians. This plan should include the following:

  • a description of the business environment (the macro environment, the opportunities, and the threats);
  • a statement of the CLC's ability to seize the opportunity and the compelling reasons to proceed with it;
  • a description of the proposed investment (for example, zoning change(s), environmental remediation, provision of infrastructure, or the subdivision of lots) and an estimate of enhanced value;
  • an account of the impact of the government's strategy in the disposal not addressed in the independent appraisal; and
  • risk or contingency plans.

Furthermore, during the first phase the custodial department should prepare a comprehensive analysis of considerations and develop final options.

The custodial department should also prepare a disposal strategy and a recommendation, seeking approval of the disposal strategy from the appropriate authority. For sales to the CLC, this document should also identify principles for future development, as appropriate, and state the conditions or limitations to be imposed on the proposed redevelopment plan, if necessary.

Once approved, custodial departments implement strategies for withdrawal or interim use and arrange for the Department of Justice Canada to close the transaction in a timely fashion.

Custodial departments will track the flow of proceeds from the sale of the property and seek access to the revenue share through the Expenditure Management Annual Reference Level Update process.

In the second phase of disposal, once a sale to the CLC is approved, the Corporation begins the formal process of obtaining the required approvals for the execution of the business plan related to the property or portfolio of properties.


Date modified: