The traditional definition of good title in law, is a title without any qualifications, exceptions or explanations. A solicitor’s opinion on title would point out any matters that were relevant to the issue of ownership.
Such an opinion might read as follows:
“you have a good and free, marketable title in fee simple, subject only to a first mortgage in favour of ABC Financial securing the principal sum of $ 100,000.00 together with interest at a rate of 5 and ½ % per annum, calculated semi-annually and not in advance….”.
You will notice that there are four distinct elements to the opinion.
1) First, the title is “good”; That means that the conveyances from the previous owners of the property have been correctly registered.
2) Second, the title is “free”; that means that there are no encumbrances other than those which are specifically mentioned. Here, the opinion refers to a first mortgage.
3) Third, the title is “marketable”; that means it is acceptable in law, and should there be a dispute, Courts will force an unwilling purchaser to accept your title to the property. It may be freely conveyed in the future.
4) Fourth, the title is in “fee simple”. This is a reference to the nature of the actual ownership interest in the property. Fee simple is the highest form of ownership. A tenancy or life interest would be good examples of lesser interests in property.
So, what are some of the other qualifications that might be mentioned? And, do they make your title better or worse? Some obvious examples include the following: utility easements for telephone, hydro, water, sewers and gas. However, there are also mutual easements for support (where two properties share a common wall), maintenance (where the two walls are so close, that you must place the bottom of the ladder on your neighbour’s property to clean your eaves trough), ingress and egress (where you share a mutual driveway). Truly, all these easements are necessitated in areas where the lots are quite small. So, that means the inner city where the property is expensive, and they are rarely found in the country.
A mutual driveway in the inner city may be a great benefit, if the area generally has street parking. In other areas where everyone has their own driveway, a mutual driveway is a minus and not a plus. And in the country, you’re probably the only person with a mutual driveway. So, it really depends upon the neighbourhood.
Utility easements generally do not affect the market value of a property. Usually, they will be designated for underground services and they will be located around the perimeter of the lot. On occasion, they may run right through the middle of the backyard and in such a case, the owner might be prevented from installing a swimming pool.
However, there are title qualifications that are generally designed to increase the value of the property and to increase the corresponding value of the entire neighbourhood. They are called “restrictive covenants” and operate much like a municipal by-law that only applies to the developer’s properties. The restrictions may be imposed upon the builders, specifying that only houses of a certain size and quality of materials can be built. In some cases, chain-link fences are excluded and wood fences permitted. In others, wood fences are excluded and wrought iron fences permitted. There are often rules imposed upon the owners, for example not permitting large trucks or trailers to be parked upon the property. The general intention is to make the area more fashionable and highly desirable.
Technically, any qualification whatsoever detracts from what is referred to as “good title in law. However, in many cases these same qualifications add value to the property, so in effect; you have a “better title” than good title
Brian Madigan LL.B., Broker