Purchase Agreement S. 5 – Land Title

s. 5 - Land Title

Section 5 of the Purchase Contract states the condition of the title before transfer to the buyer.

5.1 Title to the Property will be free of all encumbrances, liens and interests except for:

What follows this heading is a list of the items that the seller is permitted to transfer to the buyer. If there are any registrations/encumbrances that do not belong to any of the listed categories under this section, the seller or their lawyer have the obligation to remove from title. Otherwise, they would be in breach of the contract.

Before we proceed with the categories, let’s define some terms (please note that the definitions here may not be exactly as the Canadian Courts use them but they give you a great idea of what the terms mean):


(a) those implied by law;

We believe this is a catch-all clause intended to catch any permitted encumbrance not captured in the following sections.

(b) non-financial obligations now on title such as easements, utility rights-of-way, covenants and conditions that are normally found registered against property of this nature;

Let’s look at the definition of some new items listed here but please note that as the sub-clause expressly states all these registrations shall be “non-financial” in nature:

EasementRight of WayCovenant

(c) homeowner association caveats, encumbrances and similar registrations; and,

This sub-clause is very clear. Any HOA (where applicable) registration is permitted to remain on title

(d) items the buyer agrees to assume in this contract.

Lastly, if the buyer is willing to accept any registration which is not listed above, the seller is relieved from having to have it discharged. If you are the buyer of a property, please note that it is crucial for you to discuss such a matter with your lender before you agree to assume such an encumbrance. Just because in your opinion an encumbrance is acceptable does not guarantee your lender seeing it the same way. In case you have contractually agreed to accept an encumbrance but your lender does not, you are left with two options: 1. You would have to pay out of your pocket for any legal fees or other fees associated with having the encumbrance discharged/removed, or 2. You would have to find another lender who accepts the given encumbrance. Otherwise, you will no doubt run into complications at the time of closing and potentially defaulting on your purchase agreement due to issues with your financing.

It is always important to discuss any questions you may have regarding the title with your lawyer “before” removing conditions. Feel free to email us at general@agahilaw.com or call us at 403-648-3121.


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