Let the Buyer Beware

by: Gary Ball & Aaron Kylie

Once you’ve checked out the solid ground and the neighbourhood, there are a number of pitfalls to watch out for when purchasing your property.

For starters, there are the potential extra costs. The most obvious of these is property tax. Rural acreage, especially vacant land, generally has extremely low taxes compared to those in nearby urban centres. However, some provinces, like Ontario, have recently introduced Actual Value Assessment (a process to re-evaluate taxes) and property taxes in rural areas are rising dramatically in some cases, or at the very least are unstable.

Finding out how much the taxes will be is as easy as visiting the local municipal office and asking. Though this information is technically not public, the property’s assessed value and the tax rate are public information. Multiply the two to find out how much the taxes will be.

A title search, at the local registry office, is a helpful tool to reveal what access agreements and easements exist, if any, and who holds timber and mineral rights. If you use a lawyer, they will generally search these out for you, but if not, you can track them down with a little perseverance.

Access to rural property can be a potential headache, especially if you have to cross private property. So it’s a good idea to find out who owns the road that leads to a property. Major roads are most likely maintained by one level of government or another, but some backroads may be the property of another landowner. If that’s the case, will you have a right-of-way? The vendor may say they’ve used the road for years, when in fact they had a handshake agreement with the owner, or no right-of-way at all. The handshake agreement won’t automatically transfer to you, and you’ll want to have access deeded to you. As well, you’ll want to know who maintains the road and whether or not it’s year-round access, and of course if there are any costs involved, such as maintenance fees.

Easements are a similar problem that can arise with rural acreage. An easement is a legal right-of-way over a property. This could be a power line, a gas pipeline, a snowmobile trail or even a road. An easement over a property may or may not be of concern to you. For instance, a neighbouring property owner speeding up and down a roadway that crosses your property may disturb your solitude during hunting season, whereas a snowmobile trail may not bother you and might also give you another way to get to your property or offer another recreational opportunity. Once again, a purchaser has to weigh the pros and cons of the situation, but it’s important that you know of any easements on your property.

While registered easements are included in the title, many rural acreages have unregistered easements that are legally binding but are much harder to discover unless you happen upon them by chance. An unregistered easement could be a road or trail that an adjacent property owner has used for years without permission. However, a person using that trail unfettered has the right to continue using it, under a variety of situations. To protect yourself against unregistered easements, you can have the vendor guarantee in the purchase agreement that there are no unregistered easements. This won’t necessarily guarantee that no such easement exists, but it will provide you with legal recourse should one arise.

Timber and mineral rights are most often part of the title to the land. However, there are instances where timber or mineral rights have not been included in a previous sale, meaning someone could come along and clear-cut the property. It’s worth checking to make sure a purchase includes these rights not only to make sure that no one else cuts your trees, but also because you may want to selectively harvest timber to enhance the property’s habitat for a given species.

Another thing to be aware of when purchasing rural acreage is the existence of a flood plain on the property. Flood plain land adjacent to a river usually has restrictions on where, or even if, you can build. However, if you don’t plan to build on the property, flood plain may not be of a major concern, and may also reduce a property’s price. And many flood plains exist as worst-case scenarios (based on a 100-year flood) and often don’t flood at all or flood very little.

If you’re looking at a property with a stream, you need to know that several federal and provincial statutes such as the federal Navigable Waters Protection Act and the Ontario Lakes and Rivers Improvement Act may apply to a waterway flowing through a property. So you may own the land through which the water flows, but you may not own the bed of the creek, stream or river. If that’s the case, while you can restrict people from walking across your private property, you cannot prohibit them from walking in the creek or fishing in it.

As with any real estate transaction, you should also obtain a survey of the property. A survey shows the geographical boundaries of the property and is your assurance that the boundaries of the land you’re purchasing match the boundaries that are actually on the ground. If a deeded property has a reasonably current survey, it will be registered on file at the registry office or land titles office. If a current survey isn’t available, many agents and lawyers suggest that purchasers have a current survey done, or include a current survey as a condition of purchase.

A location survey is also the only way to ensure that there are no buildings either encroaching on the property by neighbouring properties or vice versa. The survey should also show easements and right-of-ways, and clearly define ownership of such things as lakeshore road allowances.

By the way, surveys vary in price like anything else in life. A number of things accessibility of the property, size of the property, the property’s proximity to the surveyor’s business, terrain all come into play when determining the cost of a survey, so shop around for the best price. A location survey generally costs between $500 and $800. A survey not only gives you an added level of comfort, but it can assist in future development of the property. And, in the event of a future sale, the existence of a survey can be considered a value-added feature.