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Title, Ownership, and Land Registration Across Canada
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A title search conducted 3 weeks before a scheduled closing revealed complications that neither the prospective purchasers nor their lawyer had anticipated. The property in question was a 2-storey commercial building in a mid-sized city in southwestern Ontario, currently operating as a retail storefront on the ground floor with office space above. The building had been listed for sale at $1.2 million, and 2 business partners operating a professional services firm had negotiated a purchase price of $1.15 million with the intention of relocating their practice to the ground floor while leasing the upper level to generate rental income.

The partners had agreed between themselves to take title as joint tenants, believing this arrangement would simplify matters if one of them died and would reflect the equal contributions each was making to the down payment and ongoing mortgage obligations. Their lawyer, however, had raised questions about whether joint tenancy was appropriate given that each partner also had a spouse and children who might have expectations about the disposition of assets upon death, and given that the firm itself was structured as a professional corporation rather than a true partnership.

The title search disclosed several issues requiring attention. The current registered owner was listed as 3 individuals holding title as tenants in common in unequal shares, the result of a partial interest having been transferred to a family member 8 years earlier following the death of one of the original purchasers. One of those registered owners had died 14 months ago, and while the estate was in probate, no transmission of title had yet been registered. A mortgage registered against the property in 2019 showed a principal amount of $640,000, but the discharge statement provided by the vendor showed an outstanding balance of only $312,000, and the commitment from the purchasers' lender required clear title before advancing funds.

Beyond these ownership and encumbrance questions, the survey and title documents revealed a right-of-way easement benefiting an adjacent property owner, permitting vehicular access across the rear parking area to reach a laneway. A restrictive covenant registered in 1987 prohibited the use of the property for manufacturing or industrial purposes, though this appeared unlikely to affect the intended professional services use. A utility easement in favour of the municipality ran along the eastern property line, and there was some question about whether a storage shed constructed near that boundary 6 years ago encroached upon the easement area. The purchasers needed to understand what these various interests meant for their planned use of the property, what steps were required to resolve the outstanding title issues before closing, and whether the form of co-ownership they had chosen was appropriate for their circumstances.

Easements, Covenants, and Other Interests That Affect Land

Land ownership in Canada has never been absolute in the sense that many people imagine when they purchase property. The idea that buying a piece of land means acquiring complete and unfettered control over that parcel is a common misconception that can lead to costly surprises for business owners, non-profit operators, and individual purchasers alike. In reality, Canadian law has long recognized that land can be subject to various interests held by parties other than the registered owner, and these interests can significantly affect how property may be used, developed, or enjoyed. Understanding easements, covenants, and other interests that burden or benefit land is essential for anyone acquiring property for business purposes, and failure to appreciate these encumbrances before completing a transaction can result in operational limitations, unexpected costs, and disputes with neighbours or third parties that could have been avoided through proper due diligence.

The concept of interests in land that exist alongside ownership has deep roots in the common law tradition that governs property rights in most Canadian provinces, while Quebec's civil law system under the Civil Code of Quebec recognizes analogous concepts through its own framework of real rights and servitudes. These interests developed over centuries as courts and legislatures recognized that rigid concepts of absolute ownership could not accommodate the practical realities of neighbouring properties, shared resources, and community needs. An easement, at its most fundamental level, is a right held by one party to use another party's land for a specific purpose, and this right attaches to the land itself rather than being merely a personal arrangement between individuals. A restrictive covenant operates differently, imposing an obligation on the owner of burdened land to refrain from certain activities or uses, often for the benefit of neighbouring properties or a broader community. Both concepts share the crucial characteristic that they can run with the land, meaning they continue to bind successive owners who purchase the property long after the original parties to the arrangement have departed.

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