Anonymised, illustrative composite. A lender's routine request for a current survey on an irregular lot turned up a decade-old shed sitting 0.9 metres onto the property being purchased.
At a glance
A buyer under contract on a $615,000 rural property near Peterborough had a financing condition that required an up-to-date survey — the lender would not commit on the irregular, partly-treed lot without one. The property had an existing survey on file, but it was decades old, from before either the current owner or the neighbour had built anything close to the shared boundary.
Nobody on either side of the deal had any reason to suspect a problem going in. The seller had lived there for years without incident, the neighbour's shed had simply always been there as far as either family could recall, and the listing itself gave no indication that the old survey no longer matched what was actually on the ground.
The new survey showed something the old one had not caught: the neighbour's storage shed sat about 0.9 metres over the property line, onto the land being purchased. As treadstonelaw.ca defines it, “an encroachment occurs when a structure — a fence, deck, shed, or even part of a building — extends over a property line onto your land”, and it is discovered exactly the way this one was: “if a title search and survey show an existing encroachment onto the property you are buying, your lawyer will advise you on the options.”
The shed itself was not worth much — a modest prefabricated structure the neighbour had used for over a decade — but removing it was not straightforward, and the seller was not willing to reduce the price to account for it. That left the buyer's lawyer working through the remaining options rather than a dollar figure: require removal before closing, negotiate a formal encroachment agreement, or rely on title insurance.
Treadstonelaw.ca lists the options directly: “require the seller to get the encroachment removed before closing; obtain a formal encroachment agreement or licence that puts the neighbour's use of your land on a documented legal footing; negotiate a price reduction to account for the issue; or obtain an indemnity and rely on title insurance.” Because the neighbour would not agree to move a shed they had relied on for years, and the seller would not move on price, the buyer's lawyer pursued the formal agreement instead — registered on title, so it binds future owners on both sides rather than being an informal understanding that could unravel with the next sale of either property.
This is a different tool from an easement or a registered right-of-way, though it works on a similar principle: it puts an existing encroachment onto a documented legal footing rather than leaving it as an unresolved trespass. The buyer's owner's title insurance policy was still put in place at closing for anything the survey itself had not caught — title insurance covers encroachments in either direction as one of the risks its owner's policy responds to.
Had the lender not required a current survey and the old one been relied on instead, the encroachment would most likely have surfaced only after closing — discovered by the new owner rather than disclosed by the file. At that point the buyer's only real options narrow to a claim on title insurance or a direct dispute with the neighbour, without the seller still in the deal to negotiate a documented resolution before money changes hands. Catching it during the conditions period is what kept this a paperwork step instead of a post-closing dispute.
The registered encroachment agreement let the deal close on schedule at the full price, with the shed situation resolved on paper rather than left to whichever owner eventually got tired of it. Because the issue was found and documented before closing, it did not become the kind of surprise a buyer discovers only after moving in.
The tell here was the lender's own caution, not anything the buyer noticed independently: an irregular lot with an old survey on file is exactly the situation where a lender's financing condition for a current survey does real work, catching a boundary problem the file would otherwise have carried unresolved into closing.
The buyer's own instinct, on first hearing about the shed, was to ask whether the neighbour could simply be made to move it. The lawyer's answer — that a formal agreement was faster, cheaper, and less likely to sour a decade-old neighbourly relationship than forcing removal — is the kind of practical read a client usually needs from their own lawyer, not from the agent, once a boundary problem turns up mid-transaction.
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