Upholding Encroachments – Honest Belief vs. Legal Title?
Where a building erected on one property encroaches onto a neighbouring property, provincial legislation may authorize a Superior Court to determine appropriate compensation as between the adjoining neighbours or require conveyance of the lands to the encroaching landowner. What criteria will a court consider in making this determination?
The Supreme Court of British Columbia recently considered a case in which, upon purchase of their adjoining properties, both neighbours were aware of the existing encroachment of a barn and shed across the property line. The owners of the encroaching structures relied upon alleged assurances from a previous owner of the adjoining property in incurring costs to maintain and improve the structures. Upon the determination of the current owner of the neighbouring property to require removal of the structures to provide him with pasture access, the owners of the encroaching structures brought a petition requesting adjustment of the property line or compelling conveyance to them of the area of the encroachment.
In dismissing this petition and allowing the neighbour’s cross-petition for removal of the barn and shed, the court determined that the relevant considerations were whether the parties had an honest belief in their entitlement to the encroachment area; the effort and cost involved in removing the encroachment; and the effect of the encroachment on property values. In weighing these considerations, the court commented:
“I do not accept that the maintenance and usage of the buildings and lands by [the petitioners] can be considered ‘honest belief’ within the meaning of the authorities. The barn and shed are large, working structures which would inevitably entail maintenance expenses. The [petitioners] derive rental revenues from the barn, and obtain economic advantages from the operation of the chicken coop. In summary they derive economic benefits from their use of the encroachment. In my view the expenses incurred were for their own benefit. They may have hoped that they could retain the usage of the encroachment in perpetuity but I do not accept that they had any reasonable assurance of that or that they expended funds or made decisions in good faith reliance on any assurance or representation of [the previous neighbour]”.
Balancing the respective interests of the parties, the court concluded:
“I agree … that lack of an honest belief should generally be treated as a crucial consideration … The issue is to be resolved on the balance of convenience. In my view the balance of convenience does not favour [the petitioners] … [The petitioners] purchased their property knowing specifically that the barn and shed and surrounding land encroached on their neighbour’s property. They now seek to obtain by court order what they did not bargain for in the first place … I conclude that the encroachments can be removed from a practical point of view, although some considerable expense will be involved. I do not accept that there will be a permanent loss in value to [the petitioners] lands, but even if I did make such a finding, it would be neutralized by the fact that [the petitioners] purchased the property with this known limitation. I accept that [the adjoining landowner] has a legitimate practical use for the lands in question. It may be that the lands in question are more important to [the petitioners] than to [the adjoining landowner], but in my view that is not a material factor in this case.”
In determining the availability of a statutory remedy, an honest belief in entitlement to the encroachment will often be a critical factor. Without such belief, other factors relating to removal expense and property value impact may well be insufficient to defeat the adjoining landowner’s legal title.