What happens if you build part of your house, cottage or garage on your neighbour’s land and your neighbour wants it removed?
That’s what happened not long ago at a lakefront cottage property on Lower Rideau Lake, near Smiths Falls in Eastern Ontario.
In July, 2006, Ronald and Karen Moffitt bought a cottage from Sylvia and Wayne McNamee who owned two adjacent lots. The McNamees had built a garage on the adjoining lot and in August, 2006, they sold the second lot to Catherine and Michael Corkery.
Prior to the closing of the sales, the parties learned that part of the garage on the Corkery property was built on the wrong side of the property line, and encroached into the Moffitt property. Apparently, everyone relied on a stake in the ground, which they wrongly believed was the dividing line.
The McNamees never got a proper land survey before digging the foundations in the wrong location. At the time of the two sales in 2006, they agreed to rectify the situation by tearing down the part of the garage encroaching onto the neighbouring lot. But that never happened.
In 2015, the Corkerys decided to sell their property, but a new survey showed their garage was still encroaching on the Moffitt property. They obtained estimates showing that it would cost $117,800 to demolish and rebuild it on their own land.
The Corkerys brought an application to Superior Court in January, 2022, to resolve the situation. They applied under a rather obscure law called the Conveyancing and Law of Property Act to allow them to buy the encroaching parcel of land underneath the garage for an appropriate payment as compensation.
The statute says that “where a person makes lasting improvements on land under the belief that it is the person’s own,” the court may order a transfer of property, if it is just to do so and upon payment of compensation.
She noted that the parties had actually arranged for the McNamees to rectify the encroachment before the 2006 transfers, but that never happened.
The court further found that the garage was a “lasting improvement,” as it was of some permanence and was not easily moved, as demonstrated by the $117,800 cost estimate for its removal.
This was a case of mistake as to title, where no one was at fault.
Based on an appraisal introduced into evidence, the court awarded the Corkerys title to the disputed 1,339.04 square feet of land upon payment of $18,500 to the Moffitts.
One important takeaway from this decision is that the most important document in a real estate transaction is the survey. Without one, a buyer may wind up getting title to the wrong piece of land — or a parcel that is not entirely underneath the purchased buildings.
The court case does not mention whether title insurance would have picked up the cost of the litigation and title transfer.