Contrary to the popular saying, what you don’t know CAN hurt you.
If you’re looking to buy Real Estate in Ontario, make sure you know what you’re getting. Failing to do the proper research could lead to you getting more than what you bargained for. An undiscovered easement on a property could turn a prime investment into a privacy-lovers nightmare.
What is an Easement?
An Easement is a right enjoyed by a dominant tenement over a servient tenement, for a purpose other than general use or occupation.
An Easement runs with the land and binds all subsequent owners. In order for an easement to exist, the properties do not need to be adjoining.
While that definition might sound confusing, it’s a lot simpler than it sounds. An Easement is the right for one property owner to enter another’s without permission.
All Easements consist of the following three elements to be valid:
- Dominant Tenement (Property receiving benefit)
- Servient Tenement (Property giving the benefit)
- Full description (Reference plan or metes & bounds)
*An important exception exists to Gross Easements. These are valid despite lack of a dominant tenement. (more on this later)
Creation of an Easement
There are four types of easements found in Ontario.
This is the most straightforward form of easement. It occurs when an owner grants privilege of use to another for a specific purpose. The most common manifestation of this Easement is a Right of Way.
In a Right of Way, the owner grants access rights of another to pass over the land of another. These easements are most commonly found in rural and recreational properties (i.e. cottages). The waterfront owner will grant an Easement to the landlocked property to access the shorefront.
Easement by Prescription
In this scenario, the Easement is granted due to adverse possession, or “squatters rights”. For example, an easement could be granted if an owner builds a fence on a neighbour’s yard. If left uncontested for an extended period of time, the fence-owner could argue an Easement exists. The burden of proof always rests on the claimant. It’s important to note that an encroachment may create an easement. The easement is not the encroachment itself, but the ramifications of the encroachment.
Claiming an easement by prescription is a difficult and complicated task. Only land under the Registry System (older system of land registration) can be claimed in adverse possession. Most land has been converted to the Land Title System. As such, Section 51(1) of the Land Titles Act, R.S.O. 1990, c.L5, states that no title could be acquired by “length of possession or by prescription”.
Easement by Implication
Two adjacent property owners may encounter a scenario in which an Easement exists by Implication. The most common example being row-houses, in which the “party wall” is integral to the structure. In this case, an Easement exists by necessity. Owners may enter into a “Party Wall Agreement” in which promises are made to maintain their respective sides, perform routine inspections and maintenance, and ensure adequate fire separation.
Easement by Statute
Public Services in Ontario can create Easements to ensure access to their facilities and equipment. Examples include an Easement for utilities or an Easement for drainage and sewer.
These are referred to as Easements in Gross. An Easement in Gross does not carry the requirement of defining a dominant tenement. In Subdivisions, its common for the developer to give a Gross Easement to the Utility or Telecommunications Company for the purposes of access and maintenance of their equipment. This Easement, while not an Easement by Statute, is the most common example of an Easement in Gross.
A Drainage Easement is another prime example of an Easement in Gross. A common requirement of a Subdivision Agreement between a Developer and a Township may require an easement for drainage to be registered on title to the saleable properties. These easements are typically temporary in nature, and allow the Municipality (or its designated authorities) the ability to enter the private land of the homes and affect grading changes to the soil to ensure proper drainage from private properties into the storm drains.
Termination of an Easement
There are 3 situations in which an Easement ceases existence.
The easement ceases to exist if the dominant and servient tenement are the same owner.
At any time, the dominant tenement (receiving the benefit) may release the Easement.
Cessation of Purpose
An Easement ceases to exist if it no longer serves purpose. For example, a developer demolishes a townhouse and the party wall no longer exists. It’s important to note here that non-use of the Easement is not sufficient evidence for cessation of its purpose. The case law varies on this matter and expert advice should be sought.
Responsibility of the Easement
An Easement grants use of a part of property, but does not transfer interest. As such, the original property owner is still responsible for the taxes on the part of the property.
Maintenance of the easement is usually the responsibility of the property owner. Owners can negotiate and register such arrangements during creation.
Easement, License, and Lease
A license grants interest in all or a portion of land for a specific period. A lease is a form of license that grants exclusive use for a stipulated length of time.
An easement differs from a license or lease in that the interest exists until terminated.
The Land Registry Offices of Ontario are responsible for keeping record of Easements. Box 7 of the Transfer of Land Form (Form 1) contains space to stipulate an easement. Schedules (Form 5) attach to these Deeds, providing more information if necessary. Lawyers use the Document General (Form 4) to dispose of an Easement.
According to Section 23 of the Registry Act, Ontario, easements must be descriptive to be enforceable. Acceptable descriptions include a reference plan, or metes and bounds descriptions. This applies to all Easements registered on or after January 1, 1967.
In present day, most owners or Lawyers choose to register the Easement on Title. A Document is registered in the parcel register of the servient and, sometimes the dominant property. This was not always the case. To ensure the possibility of Easement is thoroughly explored, lawyers recommend performing a Parcel Search of the subject property, as well as all adjacent properties. You can request a search at the region’s assigned Land Registry Offices, or via Teranet.
Title Records held at the Land Registry Offices are simply an archive of documents affecting a particular property. Its important to note that failing to properly register and report an easement does not necessarily disqualify its existence. Similarly, registration (or discovery) of an easement on title does not guarantee its legality or its enforceability.
The Ontario Agreement of Purchase and Sale
OREA’s Agreement of Purchase and Sale protects purchasers from undisclosed easements. According to Clause 10, if the solicitor discovers an easement on or before the requisition date, the purchaser can object. The clause excludes minor easements for public services and utilities.
Will an Easement Affect Property Value?
There’s no “rule of thumb” about how an Easement to property will affect its value. If the Easement (as with all improvements) adds value to the land, then you may want to market its advantage. However, subjecting your property to an Easement doesn’t immediately decrease its value.
Easement’s are a complicated and diverse topic. While this guide provides a deep explanation of Easements, its not conclusive. If you have questions, Contact ReaLawState for a free consultation.
Don’t miss out on ReaLawState’s regular articles on Real Estate and Legal topics. Subscribe to our newsletter below.