YOUR THURSDAY TIDBIT – ENCROACHMENT AGREEMENTS
When a seller enters into a standard Residential Purchase Contract with a buyer, they make certain representations and warranties (i.e. promises) to a buyer – one being that the location of all buildings and land improvements (i.e. eaves, gutters, retaining walls, etc.) on their property is on their land. If it isn’t, then there is a registered agreement on Title allowing those buildings and/or improvements to exist where they are.
Sometimes, it’s unclear to the seller, at the time of signing the standard Residential Purchase Contract, whether a structure on their property encroaches into neighboring lands. They may not have a Real Property Report (“RPR”) indicating otherwise at the time of signing the Contract. This can put the seller in an extremely vulnerable position from a legal point of view – since they promised the buyers that the buildings and land improvements were on their land but clearly that wasn’t correct.
Has the seller breached the terms of the contract if it’s found later that there is an encroachment issue? Not necessarily, as long as their lawyer (with the permission of the seller) undertakes to use their best efforts to provide a compliant RPR to the buyers that is in line with the seller’s obligations under the standard Purchase Contract and the buyers agree (which, in most cases they do). If a building or land improvement is found to encroach onto neighboring lands, easements, rights-of-way, then an encroachment agreement needs to be created, signed and registered on Title.
The encroachment agreement is a contract between the owner of the land that benefits from the encroachment (i.e. the seller) and the owner of the land granting the benefit or suffering the burden of the encroachment (i.e. the owner of the neighboring land). Generally, the owner of the neighboring land, who is granting the benefit, is compensated a mutually agreeable amount to allow the encroaching structures to exist. The agreement is registered on Title and is appropriately reflected on the RPR.
However, the owner of the neighboring land doesn’t necessarily have to agree if they don’t want to. In that case, the seller and buyer must come to a mutually agreeable resolution concerning the encroaching structures. For example, the seller may need to remove and re-install the encroaching structure(s) within the property lines, resurvey the property and provide an updated RPR to the buyers reflecting the fix. Encroachment issues can be extremely costly to remediate.
If you have any questions concerning encroachment agreements, please do not hesitate to contact Khemka Law or counsel of your choosing. We are always here to assist you and your clients. Thank you for your time and consideration.
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.