A property’s title is legal proof of who the owners of a piece of land are, their rights to the land and any limitations thereon. When an instrument (ex: mortgage, caveat, restrictive covenant, etc.) is registered on title to a piece of land, it remains on title until a specific mechanism is used to remove it. As such, changing ownership of a piece of land will not automatically remove certain registered instruments from title. Therefore, understanding the various types of registrations on title is paramount when a buyer is deciding to purchase a property – as their ownership will be affected by those registered instruments on title. This week’s Thursday Tidbit will cover some of the instruments commonly registered on title.
Registration #1 – Encroachment Agreement
An encroachment arises when there is a building or a structure on a property that intrudes onto neighboring lands (ex: a retaining wall or eves on a home or garage). The encroachment agreement is a contract between the owner of the land that has the intruding structure and the owner of the neighboring land granting the intrusion. The agreement, which is commonly registered on title, outlines various aspects of the encroachment (ex: maintenance of the structure, compensation to the neighboring land owner, and liability).
Though encroachment agreements on title are not of immediate concern, purchasers should always review the actual document registered on title to determine which structure(s) on the property encroaches into neighboring lands and whether there are any restrictions or other concerns regarding the encroachment before offering to purchase a property.
Registration #2 – Easement and Right-of-Way
An easement or right-of-way confers onto an individual, company and/or a municipality the right to access and use somebody else’s land in a certain way. As such, these types of registrations have the effect of granting third parties with the right to access a property but, at the same time, restrict an owner’s use of the affected portion of their land.
A common type of right-of-way found on title is the utility right-of-way.
A utility right-of-way on title signifies that a utility company has protected their ability to access a property to maintain, repair or replace any gas lines, underground powerlines, transformers, poles or overhead lines that may run under, on or over the property. At the same time, the utility right-of-way restricts an owner’s ability to perform activities that may hamper the utility company’s access to the property or cause safety concerns (ex: building a shed over underground power lines).
Easements and rights-of-way are not discharged (i.e. removed) from title once ownership is transferred to a buyer. Therefore, buyers should always review the actual document registered on title to ensure a right-of-way does not restrict an owner’s use of the property in a manner that would be significant or detrimental to them.
Registration #3 – Liens
A lien on title is notice of an outstanding debt between the owner of a property (i.e. the “debtor”) and an individual or institution (i.e. the “creditor”). There are different kinds of liens that may be registered on title. For example, unpaid vendor’s liens or builders’ liens. A common type of lien found on title is a builders’ lien.
The builders’ lien was created by legislation in order to provide contractors, sub-contractors, laborers and suppliers with a simple and inexpensive method to collect money due to them for work done on or materials supplied to a property. By registering a lien against the property, builders are able to ensure that they are able to get paid for their work. Note, other jurisdictions in Canada refer to builders’ liens as “mechanics’ liens.”
A buyer will not take possession of a property that is subject to a lien. As such, sellers should ensure to pay off all liens from title prior to the sale of their home or that they will have enough proceeds from the sale of their property to pay off their debt and have the lien removed from title.
If you have any questions concerning registrations on title, please don’t hesitate to contact Khemka Law or counsel of your choosing. If there’s a topic you’d like us to cover, please let us know! We are always here to assist you. Thank you for taking time to read this
Pranav Khemka, Barrister & Solicitor
T: (403) 457-9577 | F: (403) 457-9578
Suite 202, 5403 Crowchild Trail NW, Calgary, AB T3B 4Z1 | T: (403) 457-9577 | F: (403) 457-9578
LEGAL: The Thursday Tidbit provides general information and does not constitute legal advice. Circumstances may vary and no lawyer-client relationship is established from the use and reliance of this information. You are strongly advised to seek any legal advice by directly contacting Khemka Law or counsel of your choosing. Khemka Law does not warrant or guarantee the quality, accuracy or completeness of any information found within this Thursday Tidbit.