Restrictive Covenants on Title ~ Shed in Cottage Country

(Ontario Real Estate Source)

By Brian Madigan LL.B.

Question:

I am confused when it comes to what represents a valid title objection for the buyer to terminate an agreement.

In the case of a cottage property which has a shed built at a distance of 70 feet from the shoreline but the buyer finds out later when his lawyer is doing the title search that there is a restrictive covenant on the property that prohibits the construction of any buildings within 100 feet of the shore line.

Because this restrictive covenant is not being complied with, the buyer has in this case a valid objection to title and may terminate the agreement.

Answer:

The first question here is to determine whether or not it is material. The next question, assuming that it is material, is to determine if there are any remedies. The seller has the right to offer remedies first. Assuming none are acceptable, then the agreement can be declared to be at an end.

Question:

But what about if there was no shed? Would the buyer have to purchase a property if he/she finds out later from the lawyer that there is such a restrictive covenant?

Answer:

Please read the standard form title clause. It says the buyer agrees to accept restrictive covenants that are being complied with. That means “no breaches”. No shed, of course, means “no breach”. Without saying anything else, this buyer will have to accept the title, even if it comes as a surprise.

Remember, that you can change anything you want, so change this clause so that the buyer at least gets the opportunity to decide whether or not the restrictive covenant is acceptable.

Question:

Also what about if you sign an agreement of purchase and sale as a buyer and you find out later from your lawyer that there is a right of way (or any other important restriction on title which was not disclosed on MLS).

Answer:

This sort of matter shows in the public record. Search it first so that
there are no surprises. If you don’t want to pay for the search ahead of time, then change the agreement, because you are otherwise stuck if you use the standard wording.

When the buyer finds out from his lawyer, he will be annoyed. Then, when the lawyer says the he’s stuck with it because that’s the way you worded the Offer, he won’t be too pleased with you.

Question:

Do you have to buy or would this be a valid objection to terminate the
agreement?

Answer:

As indicated, you are stuck with this. Change the Offer. Not everything is on the MLS.


Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com