There’s an old real estate adage that the most important detail in the value of a home is location, location, location. As BC Notaries, there are times where we couldn’t agree more, though it has less to do with whether or not it’s in a good district, and more to do with whether or not you’ll have to tear your patio down. Consider this a cautionary tale in indefeasible title.
Indefeasible title in BC
Land title in BC is governed by something called a “Torrens” system, which has a number of features. Principle among them is that most private land in BC is registered in the Land Title Office. A “fee simple” interest (most typical home ownership) registered by a good-faith purchaser for value (someone who isn’t a fraudster) is “indefeasible”. If in good faith you buy title from someone and register that interest, you receive that interest.
This system has its advantages and drawbacks. For example, if a fraudster sells your home to a good faith purchaser, they may get to keep your house, though you’ll be compensated for your loss. However, it also means that if you purchase a parcel of land, you know exactly what you’re entitled to and what you’re not – it’s on the title.
A short story
Turning to a story I tell about a land owner, in the 1990’s, he purchased a house on land from its original owners. The house was built by those former owners and included a covered outdoor patio area, perfect for sunny Okanagan summers. For over 50 years, there was no problem at all.
Later on, the neighbour felt the need to build a fence between the two properties. When the neighbour did a survey to find out where the property line was, he discovered that the land owner’s patio extended about one foot into the neighbour’s property. While the parties tried to negotiate an easement and other options for the encroaching patio, negotiations broke down and the neighbour refused to budge.
Because the neighbour’s title to that land is indefeasible, the land owner had to remove the offending encroachment from the neighbour’s land. This mandated the land owner to receive permit approvals from the municipality, have inspections done and redesign a part of his house. Eventually the offending portion of the patio was removed, a support beam was relocated and part of the roof was removed and rebuilt. All together the cost was in the tens of thousands of dollars.
It bears repeating at this point that the land owner did not cause the problem, he inherited it. The previous owner bought the land and the built the home and offending patio, then sold it to the land owner, with neither knowing that the patio would be a source of future grief.
The good news
The good news is that the land owner had purchased a title insurance policy. Title insurance protects you in the event that there is a defect in your land title. In this case, the land owner was fully compensated for the costs of permits, legal fees, construction and more associated with altering the patio and house.
However, a further underlying lesson can be demonstrated – the importance of land surveys. As Mark Twain has famously said “an ounce of prevention is worth a pound of cure”. In this case, a simple survey (no more than $300 at the time) would have revealed the encroaching patio. The former owner could have negotiated the issue with the neighbour long ago or the land owner could have simply chosen to purchase a different property. He also could have accepted the risk in full knowledge that the encroachment may be an issue down the road.
Title insurance is an option – insurers are not obligated to insure your title. Further, it is possible that the insurer could have denied coverage if a survey had revealed the issue. This is why subject conditions in a contract of purchase and sale can help protect your rights. You can make your contract subject to a satisfactory survey and subject to approval of title insurance.
If you have a home purchase and need advice on title, come talk to one of our lawyers or BC Notaries.