January 12th - 2008

LEGALBEAT: Checking for easements

The buyer paid a deposit of $60,000 with an offer for a Toronto home.

The buyer paid a deposit of $60,000 with an offer for a Toronto home. The usual title search revealed an easement for storm and sanitary sewers across the back yard of the property. A new survey showed the easement to be 20 feet wide covering most of the rear garden. It takes up 3,400 square feet and represents 26 per cent of the total area of the property. As well, a two-storey gazebo, which was a prominent advertised feature of the property, sits partially on top of the easement.

The buyer's lawyer required the easement to be removed from title based on paragraph 10(d) of the OREA standard offer form which provides that a buyer will take title to the property subject to "any easements for drainage, storm or sanitary sewers, public utility lines, telephone lines, cable television lines or other services which do not materially affect the present use of the property."

The judge had to decide whether the easement affected the present use or enjoyment of the property in any significant way. The test to be used was whether the seller can deliver substantially what the buyer contracted to get. All of the surrounding circumstances must be considered to determine if the problem would affect the buyer's use or enjoyment of the property. The judge noted that this easement occupies most of the backyard, that access to the pipes would require entry to the rear garden, and the yard is an integral part of the enjoyment of the property. The judge also said that the specific future plans of the purchaser to landscape the property, install a pool or build a modest addition to the house "are reasonably to be expected."

Ultimately, the buyer was entitled to rescind the contract and was entitled to the return of the deposit.

Ridgley v Nielson

MERV'S COMMENTS
One way for Ontario REALTORS® to check for the existence of such easements is to use an OREA SPIS form which asks about them in Question 5. Question 6 on the form also asks about a survey and if it shows easements. Whatever the responses are, confirm them with the sellers' lawyer and/or a title search. Discovering an easement at the beginning of the transaction can make everyone aware of the circumstances and whether a proposed transaction might be completed or not.

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