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Oops! Dream home was built, in part, on land owned by neighbours

Jun 10, 2023 | 2023 Toronto Star Property Law Columns

By Bob Aaron
Toronto Star contributing columnist

Case illustrates the vital importance of getting a building location survey, as house is built, in part, on neighbours’ land.

What happens if you build part of your dream home on land owned by your neighbour?

Peter Armstrong and Shelly Martin are a married couple who own a property on Long Beach Rd., in the City of Kawartha Lakes. Vera Penny and her late husband George are the registered owners of the adjacent property fronting on Sturgeon Lake. In 1998, they hired Coachlamp
Homes to build a 3,045-square-foot custom home with a 1,216-square foot garage on their property.

Coachlamp applied to the Township of Fenelon, now the City of Kawartha Lakes, for a building permit. Coachlamp hired a land surveying firm known as Coe, Fisher, Cameron (CFC) to determine one or more boundary lines where the foundations would be dug.

Unknown to everyone at the time, Coachlamp built the home so that its most northerly point measures more than 35 feet onto land now owned by Armstrong and Martin.

In 2002, Armstrong and Martin purchased their property unaware that a large part of the Penny house was sitting on their land. They did not obtain a building location survey prior to their purchase, and did not know where the southern boundary of their land was located.

The following year, Armstrong and Martin arranged for a survey of their property and discovered that most of the Pennys’ attached garage and a corner of the main house extended onto their property.

In 2008, five years after the problem was discovered, and after lengthy, unsuccessful negotiations, Armstrong and Martin sued the Pennys for $2 million in damages for trespass, nuisance and negligence, and an injunction requiring that the Pennys remove the encroaching part of their house and garage.

The Pennys defended the action, and issued a series of what is known as third-party claims, also for $2 million. The claims were against Coachlamp for breach of contract and negligent construction, against CFC surveyors for negligence in locating the property boundaries, against Jackett Construction for negligence in digging the foundation, and against Kawartha Lakes for failure to review the building permit application and ensure that the location of the home complied with bylaw setback requirements.

The trial took place before Justice Vanessa Christie over an incredible 23 days in 2022. Each party pointed the finger of blame against all the other parties.

Last month, the judge released her 137-page decision consisting of almost 60,000 words. She determined that the Penny home could remain where it is, title to the land under the encroachment and the immediate area would be transferred to Vera Penny, and that she would have to pay Armstrong and Martin $9.10 per square foot for the ownership.

All of Vera Penny’s damages will be reimbursed to her: 70 per cent by Coachlamp, 15 per cent by CFC surveyors, and 15 per cent by the City.
Jackett Construction previously paid $10,000. Legal costs will be dealt with at a future date but will easily exceed $1 million.

The case presents an important lesson: a building location survey is the most important document in the purchase of freehold land. Failure to get one can have devastating consequences.



Contact Bob Aaron

Bob Aaron is a Toronto real estate lawyer and frequent speaker to groups of home buyers and real estate agents.
He can be reached by email at bob@aaron.ca, phone 416-364-9366 or fax 416-364-3818.

Aaron & Aaron specialize in Real Estate Law, specifically Sale of Rental, Condominium, Residential, Rural Recreation, Offer to Lease, Commercial, and New Construction

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