Are you interested in purchasing the property right next to yours?
What about the empty lot bordering your cottage property that is up for sale?
Property owners often consider purchasing an abutting property for a variety of reasons. An abutting parcel of land is one that shares at least one border with a landowner's existing parcel of land.
Reasons for purchasing an abutting parcel of land might include expanding the property that the landowner already lives on, family members who wish to own their homes next to each other, and farmers who want to grow their agricultural business by purchasing abutting parcels of farmland.
Although buying an abutting parcel of land may be beneficial, there are important legal factors to consider. Those factors briefly explained below could save the landowner considerable expense.
WHO WILL BE THE REGISTERED OWNER(S) OF THE ABUTTING LANDS? BEWARE OF THE RISK OF MERGER
It is important to consider the registered ownership of the abutting properties.
Although there are exceptions, the general rule is that if the same party owns abutting parcels of land, those parcels merge and cannot be sold or mortgaged separately.
If the owner wishes to sell or mortgage one of the merged parcels, the land must be legally severed by way of a severance application to the local municipality. It is both a lengthy and expensive process to receive a consent to sever land to form a separate parcel of land all over again.
Once the land is officially severed by the municipality, it can be sold or resold without worrying about another approval process unless a future owner chooses to merge the lands again.
WHY DO I NEED PERMISSION TO SEVER MY LAND?
The municipalities in Ontario want to make sure that their communities are protected and properly organized. Likewise, the municipalities must conduct planning reviews and approvals to ensure that future severed lands conform with their individual and established planning frameworks, that there would be no conflicts with the planning goals of the local community, and that neighbours would not be adversely affected.
Multiple severed lands at the discretion of individual landowners can have many consequences for a community, such as affecting the natural environment where frequent small lots can impede proper sewage disposal systems, and increasing municipal services such as garbage collection, snow plowing and school busing for children.
WHAT CAN I DO TO AVOID MERGING MY PROPERTIES?
A real estate lawyer can help you to find the right configuration to ownership on title for a particular property in order to avoid an automatic merger with an abutting parcel that the buyer already owns.
One example of a method to avoid an automatic merger is if one spouse owns a property and they want to purchase the property next door, they could have the other spouse own some percentage of the new property or become registered owners on title together, as joint tenants, where both spouses have equal rights and obligations to the property.
WHAT HAPPENS IF ONE OF THE JOINT TENANTS OF A PROPERTY DIES, AND THE REMAINING OWNER IS THE OWNER OF BOTH ABUTTING PROPERTIES?
The death of a joint tenant will no longer result in an automatic merger of abutting parcels owned by the surviving owner. Amendments to address this situation were made to Ontario's Planning Act in 2022. As a result, the surviving owner will be able to deal with each parcel separately without having to seek approval from the municipality.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
