What encumbrances typically flow with the land when a property is purchased?
The standard sale and purchase contract used in Alberta is provided by the Alberta Real Estate Association. In that contract, permitted encumbrances are defined as including:
- Those encumbrances that are implied by law.
- The Land Titles Act of Alberta (s.61) sets out that the Certificate of Title is subject to, irrespective of whether it is mentioned on the Certificate of Title itself, the following:
- any subsisting reservations or exceptions, including royalties, contained in the original grant of the land from the Crown,
- all unpaid taxes, including irrigation charges and drainage district rates,
- any public highway or right of way or other public easement, howsoever created, on, over or in respect of the land,
- any subsisting lease or agreement for a lease for a period not exceeding 3 years, if there is actual occupation of the land under the lease or agreement,
- any right of expropriation that may by statute be vested in any person or corporation or Her Majesty, and
- any right of way or other easement granted or acquired under any Act or law in force in Alberta
- Non-financial obligations now on title such as:
- utility rights-of-way, and
- covenants and conditions that are normally found registered against property of this nature;
- Easements can be viewed as being an agreement between the owner of the property and a third party. The easement or agreement typically permits the third-party access to the property for a specified purpose. For example, if the only way for a neighbour to access their property was to walk or drive over a part of your land, the homeowner may have provided an easement to the neighbour granting them the permission to do so. Easements can provide for access on or below ground-level. These easements should be reviewed prior to the purchase and sale of any real estate transaction; however, these types of encumbrances will remain on the land and be transferred from the seller to the new buyer ultimately making the buyer and neighbour subject to the same agreement. Consult with one of the Edmonton Law Office Real Estate Lawyers to get more information on easements affecting your property;
- A Utility Right of Way is a type of easement. It is almost always given by the owner of the land /property to the City, Town or other Municipality. This type of easement would permit the receiving party to access the property/land, either below or above the land, typically in order for the receiving party to run utilities to yours and other neighbouring properties and/or to access a utility or equipment, etc. Utility Rights of Way encumber almost all residential real estate in Alberta. Don’t be surprised if these show up on the Certificate of Title to the property you are hoping to purchase. If you have a specific plan to build something on your future property, you should consult with one of our Real Estate Lawyers to ensure that such a structure would not infringe on a Utility Right of Way.
- Covenants and Conditions normally found registered against property of this nature. The most common examples of these are Restrictive Covenants and Encroachment Agreements.
- Restrictive Covenants: A covenant is an agreement. The word “restrictive” would suggest that the agreement restricts the homeowner from doing certain things on that land. Example) Have you ever driven through a neighbourhood and wondered why everyone had the same style of roof, or why everyone’s garage was facing a certain way or built to a specific size, or why every home on that block was pushed back at least 26.5 yards from the street, or why everyone’s front door was painted either orange, blue or red? The answer is typically found in these restrictive covenants. These Restrictive Covenants almost always flow with the home meaning that they will flow from the Seller to the Buyer and the Buyer will be responsible for ensuring they are not breached.
- Encroachment Agreements – Just as the words would suggest, this is a type of agreement where a building, or part thereof, encroaches on to a neighbouring property; however, rather than being there illegally, the owners of the property (the one doing the encroaching and the one being encroached on) have agreed to permit the encroaching structure to remain there under certain conditions. The agreement between the parties would be outlined in the Encroachment Agreement and subsequently be signed by the parties and registered against titles to both properties. In almost all cases, the encroaching structure is encroaching on to your next-door neighbour’s property or the Municipality’s property. For example, the most often case we see is those homeowners who decide to build a fence backing on to the City’s property. Unbeknownst to them, they build their fence 1 foot too deep and ultimately encroaches on to the City Property. Assuming the City was nice enough not to force the homeowner to knock it down or move it back on to their own land, the City would enter into an Encroachment Agreement permitting the homeowner to keep their fence on the City’s property, subject to certain terms and other conditions. These types of non-financial encumbrances are permitted and will flow from the seller to the buyer when the buyer takes over ownership of the land/property. You should always consult with one of our experienced Real Estate Lawyers in Alberta to have a better understanding of any encroachment agreements that may affect your lands.
- Homeowner association caveats, encumbrances and similar registrations; and
- Homeowners Association (HOA) Caveats – while caveats are almost always non-permitted encumbrances (see below under the non-permitted encumbrances section), these types of caveats registered by the HOA are specifically permitted. Among other things, a Homeowners Association is tasked with, and is responsible for, the beautification, cleanliness and maintenance of the neighbourhood. In order to do this, the homeowners in that specific division or sub-division would have to pay an annual fee to the HOA.
- Have you ever seen those pretty flowers and waterfalls upon entering a newer neighbourhood? Well, those are likely maintained by the HOA. These HOA caveats are most commonly found in newer areas in your municipality and are secured against almost every property/parcel of land in that neighbourhood. These types of caveats will flow with the land from the seller to the buyer. Don’t’ be surprised if you see them on the Certificate of Title to the property you are hoping to purchase. To understand these types of Caveats better, please feel free to call the Edmonton Law Office and speak to one of our experienced Real Estate Lawyers in Alberta.
- Items the buyer agrees to assume in this contract.
- The standard sale and purchase contract used in Alberta is provided by the Alberta Real Estate Association. In that contract, the buyer and seller may agree, in writing, that certain encumbrances may flow with the land from the buyer and seller even though those encumbrances would otherwise be deemed non-permitted encumbrances. Although it is almost never recommended that a buyer assume non-permitted encumbrances, the buyer and seller may have agreed otherwise. It is always recommended that you speak to an Alberta Real Estate Lawyer before agreeing to do this.
As a result of the above, all other encumbrances, liens and interests that are not references above are therefore deemed to be non-permitted encumbrances.