Licenses and easements are not the same thing! Depending on the rights you wish to convey, there is an important distinction between the two, which was recently highlighted in an Ontario Court of Appeal case.[1] The Court was faced with a neighbouring property owners’ fight concerning a waterline. Beginning in 1966, the predecessors in title to the neighbours entered into a series of agreements to allow one neighbour to lay a pipeline to draw water from Sturgeon Lake to serve the other neighbouring property owner. The dispute arose because the neighbour drawing the water replaced the galvanized steel pipeline with a PVC line.

The Court, in its ruling, made two significant findings:

  1. Until the agreement in 1979, the parties had entered into licences only, which were not binding on and do not benefit purchasers of the respective properties; and
  2. After 1979, the court found that, based on the more recent documentation entered into by the parties, there was an easement; however, this easement only allowed the neighbours to maintain the existing pipeline in place (that is, the galvanized steel line) and not to replace it. While this easement violated the subdivision control provisions of the Planning Act in that the consent of the applicable municipality to the perpetual easement was not obtained, it was saved by the fact that the Planning Act statements had been signed in a subsequent transfer.

The lessons learned:

  1. If you intend the right to continue after transfer of the property it has to be an easement, as an easement runs with the land, whereas a license does not;
  2. That means: (a) the easement must bind one parcel and benefit another, each of which must be clearly identified (i.e. there is both what is referred to as a ‘dominant tenement’ and a ‘servient tenement’); (b) the easement must serve the benefitting parcel in some way; (c) the owners of the two parcels have to be different – you cannot grant yourself an easement; (d) right must be capable of forming a grant in the sense that the right must be certain, definitive in purpose and a right capable of being an easement. For example, negative covenants which restrict the use of land would not form a grant (but can be protected by way of properly drafted restrictive covenants), nor would the granting of excessive rights (i.e. rights in lands that go beyond what would typically form an easement in nature).
  3. Registration on title is evidence that the parties intend the agreement to be an easement but is not conclusive.
  4. A grant of easement to install something needs to include the right to maintain, repair and replace the installation and to have access over the relevant parts of the granting owner’s parcel to access the installation and to conduct maintenance, repairs and replacements.
  5. Most easements having terms of 21 years or more need Planning Act consents.[2] It is therefore important to specify who is responsible for obtaining the consent and that until a consent is obtained, the term of the easement will not exceed 21 years less a day.[3]