Restrictive covenants are registered on title against properties for a variety of reasons. In general, they serve to place limitations on how a property is to be used. The prohibited uses could include anything from using certain exterior paint colours to hanging laundry on a line outside, to limitations on the sale of the property. In a recent case, a property had a restrictive covenant registered on title granting a public right of way to the municipality, which had been granted in contemplation of the construction of a proposed public boardwalk along the natural boundary of the property. When the property usage was later changed, the municipality attempted to enforce the covenant. The new owners challenged the municipality, and the court held that it was unenforceable due to a lack of certainty.
A Change in Use of the Property
When the property in question was initially developed, it was intended to be used as a resort property. At the time, the developers granted a covenant to the municipality in contemplation of the eventual construction of a public boardwalk that would run along the natural boundary of the entire plot of land. The developer eventually ran into financial difficulties, and the plan for the resort was abandoned. The plot was later subdivided and sold as individual parcels of land.
The petitioners in the case at hand purchased their property in 2013, fifteen years after the original covenant had been granted. Two years later, the municipality informed them that it planned to go ahead with the plan to construct the public boardwalk, and as a result, would be enforcing its right of way under the covenant. The petitioners objected and brought a motion seeking an order cancelling the covenant under s. 35 of the Property Law Act, which grants courts the right to cancel or modify charges registered on a property’s title if certain conditions are met.
Unclear Boundaries and Vague Plans
With respect to restrictive covenants on property, the court noted that:
Covenants such as these which run with the land must be clearly and distinctly stated so that present and future owners may know with precision what obligations are imposed upon them.
In the original covenant, there were no boundaries or diagrams included that showed the exact location of the proposed boardwalk. Further, when the municipality notified the petitioners about its intent to proceed with the boardwalk, the municipality informed them that a survey would be conducted in order to define the boundaries of the boardwalk.
Under s. 116 of the Land Title Act, plans for a statutory right of way are required to set out the boundaries and measurements which show how the right of way impacts each individual parcel of land it connects with. The court noted that, in this case, “there was no crystallization of any interest in land the [right of way] could have conveyed to the District because the boundaries of that interest were never determined.”
The Covenant Could Have Been Preserved if Other Conditions Were Met
The court found that it would have been possible to save the covenant by other means, however, neither option was applicable in the case at hand. Had there been a definitive plan for the boundaries of the boardwalk and therefore, the right of way set out in a separate document, or had the boardwalk actually been constructed, this would have clearly defined the area of the boardwalk for the property owners and therefore would have satisfied the requirements under the Land Title Act. However, since neither scenario was applicable, the court found that the covenant could not be upheld, and ordered it removed from title.
Purchasers Should Complete a Thorough Review of Title When Considering a Property
While in this case, the homeowners were successful in removing the restrictive covenant, it is advisable that anyone contemplating the purchase of land complete a full review of the property’s title before purchasing. This will highlight any restrictions, charges or other registrations against the property, notifying buyers in advance of any issues they may face or that might need correction before the purchase is completed. If done before the contract is signed, the correction of these issues can even be built into the agreement.
The lawyers at Cherkowski Marsden LLP have over 50 years of combined experience assisting clients with real estate purchases and sales. They will carefully review any Contract of Purchase and Sale before signing in order to ensure that your rights and concerns are properly addressed. To arrange a consultation with an experienced lawyer, please contact their office online or by phone at 250-308-0338.