When you are buying or selling a home, it is important to review a current copy of the title to ensure everything looks accurate. Along with reviewing the names and legal description of the title, you also want to look at the registrations on the title and understand what they mean.Here is a list of commonly seen registration and what they mean.
Please note that this is not an exhaustive list and if you see a registration you do not understand, you should speak to a real estate professional.
Restrictive Covenants: This covenant places a restriction as to what can be done with the piece of land and can vary significantly. It is best practice to have a client read those covenants so they know whether there will be restriction as to what types of fences they can have, whether they can operate a certain business there, etc.
Liens: A lien is registered on title based on the law. A lien on title indicates that the owner of the property owes money to someone. Regardless of the situation, the owner needs to discharge the lien before agreeing to sell the home or prior to possession day or the sale may not close.
Caveats: these are registered is there is a written agreement charging the land, including debts (mortgages or promissory notes), dower interests, builder’s liens and more. Like restrictive covenants, these can vary and as such, it is important to review the actual document that is registered at the Land Titles office.
Utility Right of Way: This shows that there is a strip of land under which utilities are buried and a landowner will not be able to build anything on top of the utility right of way. If there is something built on top of it, then the homeowner will not get Municipal compliance.
Overland water drainage: Similar to a utility right of way, this is a strip along the back or side of a property containing a concrete swale, which allows the water to run to a street or sewer. This means that there cannot be anything built onto the reserved space or block the water drainage. If you do, you may be required to remove the structure or it may be removed or destroyed for you.
Encroachment Agreements: When a structure is built on a property and it extends past the property line onto the neighbouring property, an encroachment agreement is signed and registered with the Land Titles Office. The agreement sets out the “rules” that allow the encroaching structure to remain in place and addresses maintenance, liability and what happens if the structure needs to be rebuilt. These agreements are common and not a cause of immediate concern, but it is good to have your clients be aware of them.
Easements/ Right of Way: These run with the land and cannot be discharged. They allow someone other than the property owner access the property. Some examples are allowing for maintenance to adjoining properties, allowing for use of a shared road that is located on only one property, and access to utility lines or shared wells.
Writs and Certificates of Lis Pendens (CLP): These registrations indicate that the property is involved in a litigation matter. When you see a CLP, know that the owner of the property has likely been sued but there is no judgement yet. If the court rules in favour of the plaintiff, a writ is registered on title to show that the plaintiff has actual interest in the property. Note: A seller MUST discharge this registration prior to the closing of the sale.
Source: CREB