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Registering Encroachment Agreements

March 16, 2022

Alberta

,

Canada

Issue

In what circumstances will a registered encroachment run with the land?

Conclusion

No cases were located that identified any particular requirements in order to register an encroachment agreement that runs with the land. No cases were located in which a court offered any interpretation of or insight into s. 72 of the Land Titles Act, which provides for the registration of encroachment agreements. (Land Titles Act)

An encroachment agreement executed by the registered owner of a parcel of land to permit the encroachment of improvements made on an adjoining parcel of land:

(a) may be registered against the parcels of land affected by that agreement, and

(b) after registration shall be binding on and enures to the benefit of all persons subsequently acquiring interests in the parcels of land affected by that agreement to the same extent as if it were an easement. (Land Titles Act)

By contrast, in the case of a registration of a restrictive covenant under s. 48 of the Land Titles Act, the first owner, and every transferee, and every other person deriving title from the first owner or through tax sale proceedings, is deemed to be affected with notice of the condition or covenant, and to be bound by it if it is of such nature as to run with the land. The entry on the register of a condition or covenant as running with or annexed to land does not make it run with the land, if the covenant or condition on account of its nature, or of the manner in which it is expressed, would not otherwise be annexed to or run with the land. (Land Titles Act)

Section 48 of the Land Titles Act largely codifies the common law. To run with land, a covenant must be negative in nature, i.e. a covenant that the land or a specified portion of it is not to be used in any particular manner. Further, it is not sufficient that it bind the servient tenement; it must demonstratively benefit the dominant tenement. There must be a certificate of title in existence for parcels of land affected by the covenant. The fact that the registrar accepts the restrictive covenant or the caveat for registration as “running with the land” does not make it run with the land if it would not otherwise do so because of its nature or the manner in which it is expressed. (Kolias v. Owners Condominium Plan 309 CDC)

In May v 1986855 Alberta Ltd (which was reversed on appeal at May v. 1986855 Alberta Ltd., 2018 ABCA 94 (CanLII)), Burrows J. dismissed an application for an injunction preventing one neighbour from breaching any of the four agreements registered against title to the adjoining properties by demolishing a shared garage on the parties' adjoining properties. The Court found that there were legitimate issues to be tried respecting the interpretation of the two encroachment agreements, the party wall agreement, and the mutual easement. The two encroachment agreements provided that they "shall benefit and bind the successor and assigns of the original parties" but, unlike the party wall agreement or the easement, they did not expressly provide that they ran with the land or that they could be registered against the titles to the lots. The Court did not make any findings respecting the validity or effect of any of the registered agreements.

In Raso v. Lonergan, the neighbour's fence encroached onto the yard of the land owner. Sharpe J. found that the neighbour established a claim to the disputed area through adverse possession. While it was not necessary, as a result of the finding of adverse possession, to consider the validity of the registered encroachment agreement, the Court did find that it was valid and binding upon the parties. The encroachment agreement in question stated that the agreement shall "enure to the benefit of and be binding upon the parties, heirs, executors, administrators and assigns of the parties hereto" and was registered on title. The Court did not address whether the statement was vital to the validity of the agreement.

Law

Section 72 of the Land Titles Act, RSA 2000, c L-4 provides that an encroachment agreement executed by the registered owner, after registration, will be binding on and enure to the benefit of all persons subsequently acquiring interest in the land:

Encroachment agreement

72(1) An encroachment agreement executed by the registered owner of a parcel of land to permit the encroachment of improvements made on an adjoining parcel of land

(a) may be registered against the parcels of land affected by that agreement, and

(b) after registration shall be binding on and enures to the benefit of all persons subsequently acquiring interests in the parcels of land affected by that agreement to the same extent as if it were an easement.

(2) Notwithstanding subsection (1), before an encroachment agreement may be registered against a parcel of land under subsection (1)(a), certificates of title must exist for all parcels of land affected by the agreement, including the parcel of land that is subject to the encroachment and the parcel of land that is to benefit from the encroachment.

By contrast, s. 48 of the Land Titles Act, RSA 2000, c L-4, which provides for the registration of a restrictive covenant, provides that a transferee of the land is deemed to be bound by the restrictive covenant only if it is of such a nature as to run with the land:

Registration of restrictive covenant

48(1) There may be registered as annexed to any land that is being or has been registered, for the benefit of any other land that is being or has been registered, a condition or covenant that the land, or any specified portion of the land, is not to be built on, or is to be or not to be used in a particular manner, or any other condition or covenant running with or capable of being legally annexed to land.

(2) When any such condition or covenant is presented for registration, the Registrar shall enter a memorandum of it on the proper certificate or certificates of title.

(3) Notwithstanding subsection (2), before a memorandum of a condition or covenant may be entered on a certificate of title under subsection (2), certificates of title must exist for all the parcels of land affected by the condition or covenant, including the parcel of land that comprises the servient tenement and the parcel of land that comprises the dominant tenement.

(4) The first owner, and every transferee, and every other person deriving title from the first owner or through tax sale proceedings, is deemed to be affected with notice of the condition or covenant, and to be bound by it if it is of such nature as to run with the land, but any such condition or covenant may be modified or discharged by order of the court, on proof to the satisfaction of the court that the modification will be beneficial to the persons principally interested in the enforcement of the condition or covenant or that the condition or covenant conflicts with the provisions of a land use bylaw or statutory plan under Part 17 of the Municipal Government Act, and the modification or discharge is in the public interest.

(5) The entry on the register of a condition or covenant as running with or annexed to land does not make it run with the land, if the covenant or condition on account of its nature, or of the manner in which it is expressed, would not otherwise be annexed to or run with the land.

(6) No such condition or covenant is deemed to be an encumbrance within the meaning of this Act.

In Kolias v. Owners Condominium Plan 309 CDC, 2007 ABQB 714 (CanLII), (which was reversed on appeal at Kolias v. Owners: Condominium Plan 309 CDC, 2008 ABCA 379 (CanLII)), MacLeod J. analysed the requirements of a restrictive covenant in order for it to run with the land:

Is this restrictive covenant “of such nature as to run with the land”?

[16] As Slatter J. said in Potts v. McCann (2002), 325 A.R. (4th) 269 (Q.B.), 2002 ABQB 734, the common law has long recognized negative covenants which relate to the land itself. Indeed, my reading of s. 48 leads me to the conclusion that it largely codifies the common law. To run with land, a covenant must be negative in nature, i.e. a covenant that the land or a specified portion of it is not to be used in any particular manner. Further, it is not sufficient that it bind the servient tenement; it must demonstratively benefit the dominant tenement. Subsection 3 requires that there be a certificate of title in existence for parcels of land affected by the covenant. The fact that the registrar accepts the restrictive covenant or the caveat for registration as “running with the land” does not make it run with the land if it would not otherwise do so because of its nature or the manner in which it is expressed.

[17] In my view, there can be little doubt that the restrictive covenant at issue is of such a nature as to run with the land. It clearly exists to protect the sight line of the dominant tenement by preventing the owner of the servient tenement from erecting buildings or any other thing on certain portions of the lot in excess of a certain height. The protection of sight lines from a particular parcel of land directly affects the mode of occupation of the servient tenement. This is to be contrasted with the sort of covenant which was found to be personal in nature in Canadian Construction Co. v. Beaver (Alberta) Lumber Ltd., 1955 CanLII 61 (SCC), [1955] SCR 682 or Galbraith v. Madawaska Club Ltd., 1961 CanLII 16 (SCC), [1961] S.C.R. 639.

In May v 1986855 Alberta Ltd, 2017 ABQB 617 (CanLII), (which was reversed on appeal at May v. 1986855 Alberta Ltd., 2018 ABCA 94 (CanLII)), Burrows J. dismissed an application for an injunction preventing one neighbour from breaching any of the four agreements registered against title to the adjoining properties by demolishing a shared garage on the parties' adjoining properties. The Court found that there were legitimate issues to be tried respecting the interpretation of the two encroachment agreements, the party wall agreement, and the mutual easement. The two encroachment agreements provided that they "shall benefit and bind the successor and assigns of the original parties" but, unlike the party wall agreement or the easement, they did not expressly provide that they run with the land or that they could be registered against the titles to the lots:

[6] There is a “common driveway” proceeding from the street in front of the Lots, leading from 100th Street, between the houses (when they were both there), to the garage. The “car doors” of the garage, like the houses, face west. Vehicle access to the garage, when it was used to house vehicles, was from the front of the Lots 15 and 16, not from the alley behind the garage.

[7] On September 27, 1999, the then owners of the two lots entered into four agreements:

a. An encroachment agreement by which the owner of Lot 15 granted certain rights in relation to the portion of the garage on Lot 15 to the owner of Lot 16.

b. A second encroachment agreement, the terms of which parallel exactly the terms of the first encroachment agreement, and by which the owner of Lot 16 granted certain rights in relation to the portion of the garage on Lot 16 to the owner of Lot 15.

c. A “Party Wall Agreement” by which the owners of each lot granted rights to the owner of the other lot in respect mainly of the maintenance of the centre wall of the shared garage building and to at least some elements of the structures attached to that center wall.

d. A “Mutual Easement” by which the owners of each lot granted an easement to the owner of the other lot in relation to the common driveway leading from 100th Street, between the houses to the double garage at the back of the lots.

[8] The agreements are not models of clear drafting. The encroachment agreements in particular are, in my view, very confusing. As I read them, it appears possible that they have, in some provisions, confused the two lots – possibly creating, for example, an obligation on the part of the owner of Lot 16, at his or her expense, to keep the portion of the garage on Lot 15 in good repair (paragraph 3a).

[9] The term “Encroachment” is used in the first provision of each agreement apparently in reference to the portion of the garage on one lot, and in the second provision in reference to the portion of the garage on the other lot. Confusion is extended when terms such as “Encroachment Lands” are used as if they had been defined though they have not been.

[10] The Party Wall Agreement appears to refer in most of its provisions to only the center wall of the double garage, as opposed to the entirety of the double garage building or any other portion of it. Though the agreement does not expressly so recite, I expect it was intended to be a Party Wall Agreement within the meaning of the Land Titles Act, s. 71.

[11] One provision of the Party Wall Agreement is of particular significance to this application. Paragraph 14 provides:

The parties hereto agree that no more than one distinct dwelling unit shall be permitted on each of Parcels A [Lot 15] and B [Lot 16] and shall take such steps as may be necessary to ensure that no additional dwelling units are developed or occupied.

[12] The encroachment agreements each contain a provision which appears to be inconsistent with paragraph 14 of the Party Wall Agreement. Paragraph 4 of each of them provides:

Subject to compliance with all applicable laws, the Grantor shall be entitled to construct any development upon the Grantor’s Lands up to and immediately adjacent to the Encroachment [which, in most provisions of the agreement appears to mean the portion of the garage on the Grantor’s lot] without the prior consent of the Owner . . .

[13] The Party Wall Agreement and the Mutual Easement Agreement each expressly provide that they shall run with the land, shall bind and benefit the heirs, executors, administrators, successors and assigns of the parties who initially agreed to them, and may be registered on the titles to each of the lots. The encroachment agreements provide that they shall benefit and bind the successor and assigns of the original parties but do not expressly provide that they run with the land or that they may be registered against the titles to the lots. All four agreements have been registered against the titles to each of the lots.

In Raso v. Lonergan, 1998 CanLII 17713 (ON CA), the neighbour's fence encroached onto the yard of the land owner. Sharpe J. found that the neighbour established a claim to the disputed area through adverse possession. While it was not necessary, as a result of the finding of adverse possession, to consider the validity of the registered encroachment agreement, the Court did find that it was valid and binding upon the parties. The encroachment agreement in question recited that consideration had been given using the conventional language and it specifically stated that the agreement shall "enure to the benefit of and be binding upon the parties, heirs, executors, administrators and assigns of the parties hereto." The encroachment agreement was registered on title:

1 It is common ground that the legal test to determine the respondent's claim to title by adverse possession is that the respondent must show that for ten years:

(1) he or his predecessor was in actual possession of a particular, delineated parcel of land;

(2) he intended to exclude the true owner from possession; and

(3) the true owner was in fact effectively excluded from possession:

Masidon Investment Ltd. v. Ham (1984), 45 O.R. (2d) 563 (C.A.)

2 The respondent's claim essentially rests upon a statutory declaration provided by the respondent's predecessors in title indicating that from the time they acquired the property in 1973 until they conveyed the property to the respondent in 1990, the fenced boundary at issue existed and remained in the same location throughout the period of their ownership. Specifically they attest that during that time, they were in "actual, exclusive and continuous, open, undisturbed, notorious, visible, undisturbed and undisputed" possession. In addition, the respondent relies upon the "encroachment agreement" between his predecessor and the predecessor of the applicant whereby the parties agreed that fenced boundary could remain in its present location.

[...]

7 An attack is also made upon the encroachment agreement relied upon by the respondent as an alternative. In light of my findings with respect to the adverse possession claim, the encroachment agreement question is moot. However, for the sake of completeness, it is my view that the agreement is valid and binding. It recites a consideration has been given using the conventional language "in consideration of the sum of $2 and other good and valuable consideration". It specifically states that it shall "enure to the benefit of and be binding upon the parties, heirs, executors, administrators and assigns of the parties hereto" and was registered on title. It is my view that the agreement is binding upon both parties to this proceeding.

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