The client
A family purchasing a rural lot near Saint John, New Brunswick, to self-build a home with a construction (draw) mortgage, found the lot's only access ran along a private lane crossing a neighbouring property — used without incident for decades, but never registered as an easement on either title.
Land purchase price
$55,000
Rural New Brunswick lot
Construction contract
$230,000
Stick-built self-build
Combined income
$7,300/month
Both salaried
Other debt
Car loan $260/mo
Unchanged through the build
Access
Private lane, unregistered
Decades-old verbal arrangement with a neighbour
The problem
A title insurer will not insure a new mortgage against a property with no confirmed legal access, and a lender will not release a first draw on an uninsurable title. However long a verbal understanding with a neighbour has held, it binds nobody if that neighbour's land ever changes hands — a new owner has no obligation to honour an arrangement they never agreed to.
What a verbal right-of-way doesn't give you
- ▸Nothing registered on title means nothing binds a future owner of the neighbouring land
- ▸A title insurer prices and insures against what's registered, not what's understood
- ▸A lender's first draw depends on an insurable title existing before construction even starts
The construction contract and the household's own finances were never the issue — a $1,946 qualifying payment against $7,300 of income was always comfortable. Getting the access legally confirmed was the entire obstacle.
The numbers
Once the easement was registered, the file proceeded as an ordinary insured self-build.
| The insured self-build | Amount |
|---|---|
| Land purchase price | $55,000 |
| Construction contract | $230,000 |
| Total as-complete value | $285,000 |
| Minimum down payment (5% tier) | $14,250 |
| Base mortgage | $270,750 |
| CMHC premium — 4.00% in the 90.01-95% LTV band | +$10,830 |
| Total insured mortgage | $281,580 |
| Ratio check at the qualifying rate | Figure |
|---|---|
| Minimum qualifying rate on a 4.85% contract rate | 6.85% |
| Payment at the qualifying rate, 25 years | $1,946 |
| GDS (payment + $250 tax + $115 heat) ÷ $7,300 income | 31.7% |
| TDS (GDS numerator + $260 car loan) ÷ $7,300 income | 35.2% |
New Brunswick's flat 1% real property transfer tax on the $55,000 land purchase comes to $550 — a small, verified figure next to the access problem that actually held the file up.
The solution
A mortgage broker licensed under New Brunswick's Mortgage Brokers Act treated the access question as a legal precondition to financing, not a detail to sort out after closing.
First, engaged a real property lawyer and a surveyor. Confirmed exactly where the lane sat relative to both properties' boundaries before approaching the neighbour with anything specific to sign.
Second, negotiated a formal easement agreement directly with the neighbouring landowner. Documented the right-of-way's width, maintenance responsibilities and permitted uses, so both sides knew exactly what was and wasn't being granted.
Third, registered the easement against both titles before returning to the lender. Gave the title insurer something concrete to underwrite, rather than a description of a long-standing understanding.
The outcome
The registered easement satisfied the title insurer, the first draw released on the builder's original schedule, and the file funded with GDS at 31.7% and TDS at 35.2%, both comfortably inside CMHC's maximums.
What to take from this file
- 01A verbal right-of-way, however long-standing, doesn't bind a future owner of the neighbouring land. Only a registered easement does.
- 02A title insurer underwrites what's registered, not what's understood between neighbours.
- 03Resolve access before the first draw, not before closing on a resale. A construction file needs an insurable title from day one, not just by possession day.
- 04A survey is worth doing before negotiating an easement, not after. It settles exactly what's being granted before anyone signs anything.
- 05New Brunswick's flat 1% real property transfer tax is one of the few verified provincial transfer-tax figures in Atlantic Canada. Use it, but don't assume the same clarity exists next door.
Sources
Every regulatory figure in this file traces to one of these primary sources. Client details and anything that varies by lender are illustrative, as flagged below.
- ▸CMHC — Purchase (Mortgage Loan Insurance) — default-insurance premium schedule by LTV band (25-year amortization).
- ▸CMHC — CMHC Home Start — minimum down payment tiers (5%/10%) and the $1.5M insured price cap.
- ▸OSFI — Minimum qualifying rate for uninsured mortgages — the minimum qualifying rate — greater of contract rate + 2% or 5.25%.
- ▸CMHC — CMHC Reviews Underwriting Criteria — GDS 39% / TDS 44% maximums and the 600 credit-score floor for insured files.
- ▸Real Property Transfer Tax Act, S.N.B. (via laws.gnb.ca) — New Brunswick's flat 1% real property transfer tax.
- ▸Provincial/territorial mortgage-broker legislation fetched directly (bclaws.gov.bc.ca, legisquebec.gouv.qc.ca, fcaa.gov.sk.ca, web2.gov.mb.ca, nslegislature.ca, assembly.nl.ca) plus FCNB's own site for NB and CanLII's index for PE — see notes for per-province method — provincial mortgage regulators and licence titles.
Illustrative in this file — lender-specific, not rules:
- ▸4.85% contract rate — rates move daily; not a quote.
Authority & provenance
How this case file was built
We publish the origin, the verification method and the reviewer for every case file, so you can judge how far to trust it before you rely on it with a client.
Where it comes from
Derived from files handled by Treadstone’s fulfillment desk and from scenarios contributed by partner brokerages. Names, employers, exact amounts and dates are changed so no client or file is identifiable.
Provenance: Composite — a pattern seen repeatedly on fulfilled files, not a single transaction.
What is verified
Every regulatory figure traces to a primary source listed above and was checked against it on the date shown. The arithmetic is recomputed by machine on every rebuild.
Anything that varies by lender is labelled illustrative rather than stated as a rule.
Who reviewed it
Reviewed for Canadian regulatory accuracy before publication, and re-checked whenever a cited rule changes.
Reviewed by: Nicholas Parson, Treadstone Associates — reviews every case file before publication.
This case file is professional reference material for licensed mortgage professionals. It is not advice to a borrower, and it is not a lender commitment. Insurer rules, qualifying rates and provincial taxes change — confirm the current position with the insurer, regulator or lender before you rely on any figure here in a live file.