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Encumbrances and Easements

Encumbrances and Easements

Q.  Does a buyer have the right to terminate the Contract of Sale if there are easements on the property and the easements have not been disclosed in the contract.

 

A. If an easement has not been disclosed in the Contract of Sale then the buyer may have the following rights:

1)     The right to terminate the contract of sale; and

2)     The right to compensation for their loss.

TIP –  A seller is required to disclose all easements on title and statutory easements for sewerage and drainage which may not appear on a title search. We recommend that you always complete a title search prior to preparing a Contract of Sale and ask a Seller if they are aware on any easements or encumbrances not noted on the title. If the title search shows that the property has an easement or encumbrance, then each easement or encumbrance needs to be noted into the “matters affecting property” section of the contract exactly as it appears on the title search. Only those easements and encumbrances which will remain after settlement need to be disclosed in the Contract of Sale therefore a mortgage which is registered on title is not required to be noted in the contract if it will be removed at settlement.