Much has been written about the intricacies of buying a rural property. For example, in most cases, such properties have their own well and their own septic system.
The Requirements of Wells
Wells will be either dug or drilled. If the well on the property is drilled, you should ask the seller for a well driller’s certificate, which will provide information on the well depth, the quality of the water, the amount of water that the well produces, and so on. You should also make sure that the agreement of purchase and sale contains a warranty by the seller that the well has operated continuously without any problems, and that it will continue to operate without problems on closing. You should also make sure that you or your real estate agent take at least two water samples well before closing, and have them tested for potability; this test should be repeated just before closing.
Most commercial mortgage lenders will not accept the property as collateral for your mortgage loan unless the water is possible and free from contamination. On occasion, if the water samples are continuously unacceptable, a filtration device such as an ultraviolet radiation purifier can be installed to destroy any live bacteria. This is usually an acceptable solution; I do not favour the popular approach of pouring bleach down the well to shock it, because this provides a very temporary remedy and does not address the underlying causes of contamination.
On occasion, the well which supplies water is located on an adjacent lot. In this case, your lawyer will want to see a properly drafted well sharing agreement which sets out responsibility for ensuring that the well will continue to operate and supply a sufficient amount of water for normal household use for each property, who is responsible for maintenance and repairs, who pays the cost, whether or not the water itself must be paid for, and what happens if the well runs dry.
Addressing the Septic System
If you have never bought a property with a septic system, you should do your own research on how these systems operate. Make sure that the agreement of purchase and sale requires the seller to provide a warranty that the system will be in good working order on closing, and requires the seller to produce an installation permit and a use permit.
Sometimes, people will renovate a rural property by adding bedrooms and bathrooms, etc., which changes the load for which the original septic system was approved. While the existing system may still be adequate to manage the potential load, you should ask the seller to get the installation and use permits upgraded to reflect the load that is currently being placed on them. If the existing system is inadequate, you could face potentially thousands of dollars for the cost of upgrading the system and having it inspected.
Occasionally there are road access issues. This is particularly true of waterfront and other vacation properties. The access road or driveway may be over private land, and often there is no guaranteed legal right of use. Responsibilities for road maintenance are often unwritten. In these cases, you risk having your road access restricted or cut off, or being asked to pay for repairs you do not agree with. Your lawyer’s title search may become quite expensive if it involves the process of tracing the legal access over private properties to connect to a municipal road. Title insurance has become an effective tool in overcoming the problems of lack of proper legal access, but it isn’t always available.
Boundary issues also sometimes exist. If the dividing line between one property and the next was traditionally regarded as consisting of a tree line, a hedge, or an old fence, such things can change over time. Even in older urban neighborhoods, boundary issues will arise. When these issues do arise, we have to deal with the possibility that effective ownership of some of the land has been either acquired or lost through usage by someone other than the owner of the legal title. Lawyers refer to this as “adverse possession”, although the more common name is “squatter’s rights”.
In most parts of Ontario, it is no longer possible to gain or lose ownership and usage rights in this manner, unless those rights had already existed at the time the Ontario government converted the title registration system from the old paper-based system to a new online system. That change occurred over a multi-year period starting in early 1999.
Occasionally a part of the property is used for agricultural purposes, either by the seller or by a tenant farmer. That introduces the issue of whether or not HST applies to the agreement. In many cases, it applies to the portion of the property that is being used for farming or other agricultural uses. Be sure to tell your lawyer how the property is being used now because this could affect your pocketbook: many sale agreements provide that HST will be in addition to the purchase price, which means that you as a purchaser will be paying the HST on top of the purchase price, even if you have no intention of continuing the usage that triggered the HST after closing.
If you have managed to reach this point in this article, you will understand that what I have said is very general in nature, and that not every comment or point applies to every situation. Therefore, you should not rely on anything in this article without first consulting your own lawyer about how the particular issue or point applies to you.