Written By Simon Crawford and Dana Talucci

For a good long time, Ontario has had two systems for recording the ownership of real property: the registry system and the land titles system, and in the last few decades has been undertaking the concerted effort of consolidating all lands into the land titles system. The process for converting lands from the registry system to the land titles system involves the making of what is called a "first application", which requires the submission of a 40 year title search, a current survey and notice to adjoining land owners—the idea being that, at the time of conversion, one is establishing that the owner has absolute title.¹

One of the magic things about having absolute title to real property under the land titles system, is that another cannot acquire (or continue to run the clock to acquire) adverse possessory rights to such real property—what you might think of as squatter's rights.²

That said, adverse possession is still very much possible where the land remains in the registry system. As a practical matter, these tend to be rural lands (cities and densely populated areas having been almost entirely converted to land titles).

The test for establishing adverse possession is well settled law. The person claiming the possessory interest must prove that:

1. they have been in actual possession of the land in question for more than ten years;³
2. they had the intention of excluding the true owner from possession;
3. they had effectively excluded the owner; and
4. their possession has been visible, open, notorious and continuous.⁴

The Ontario Court of Appeal recently had the opportunity to apply this test. The facts of the case serve as a good reminder to those who, with all good neighbour intentions, allow another to use or access a portion of their lands for ten or more years.

Palmer v. Ioannidis⁵ considers the story of two neighbours, Palmer and Ioannidis.

Palmer has registered title to a lot with a home on it. Ioannidis has registered title to a neighbouring field and to lands on the north and west sides of Palmer's home (the Disputed Land). At the time Ioannidis acquired registered title to the neighbouring field and the Disputed Land, the Disputed Land was, from a visual perspective, maintained as part of the lawns of the Palmer's home, with a fence around it, separating it from the field.

All of these lands were originally owned by Palmer's father. Palmer's father gifted a lot of land to Palmer to build his home. Later, with the consent of his father, Palmer also occupied the Disputed Land. A fence was erected separating the home and the Disputed Land from the field next door. Palmer's father eventually sold and conveyed the field next door (together with registered title to the Disputed Lot) to Brombal.

For at least the next 10 years, Palmer landscaped and planted trees along the outer boundary of the Disputed Land and maintained it together with, and as part of, the lawns of his home without any contest from Brombal.

In 2017, Brombal sold its lands to Ioannidis, and in a single day, Ioannidis handed Palmer a survey (which showed the Disputed Land as being part of the same title as the neighbouring field), removed the fence and cut down all the bushes and mature trees. Ioannidis then put up a new fence, excluding Palmer from the Disputed Land.

Palmer went to court.

The trial judge found the following:

1. Palmer's possession of the Disputed Land became adverse when his father sold the remaining property to Brombal, and that Palmer had possession of the Disputed Land for at least ten years prior to the land being entered into the land titles system. There were no discussions between Brombal and Palmer, and consent was never obtained for such use.
2. Palmer intended to exclude Brombal from possession. He viewed the Disputed Land as his own and acted in a manner consistent with such belief. Palmer used the Disputed Land as part of his residential property, tended to the lot and planted trees and shrubs at the edge of the Disputed Land. Palmer's use of the Disputed Land was inconsistent with Brombal's use, which during such ten year period of time was farming.
3. Brombal was excluded from the Disputed Land by the hedge, the fence and Palmer using it as part of his residential lawn, and did nothing about such exclusion.
4. Palmer's possession of the Disputed Land was visible, open, notorious and continuous. Brombal knew that Palmer's use of the Disputed Land encroached on its property, but (being neighbourly), did nothing about it.

When the case was taken to the court of appeal⁶, the focus was on whether the trial judge erred in her application of the inconsistent use test, which is a requirement that is part of the "intention to exclude" branch of the adverse possession test. When courts analyze this branch of the test, they look to see if the claimant of adverse possession can show that there is an inconsistent use of the property, meaning that to dispossess an owner of its land, the acts of the occupier must be inconsistent with the form of enjoyment of the property intended by the owner.

Ioannidis argued that Brombal wasn't concerned with the fence location during the ten year period of possession by Palmer because Brombal's longer term plan was to develop the lands. Accordingly, (the argument was that) Palmer's use of the Disputed Land wasn't "intended" to exclude Brombal from its future use of the Disputed Land for development.

The Court of Appeal affirmed the trial judge's determination that the possible future development potential of the land was not relevant. What was relevant, was the use of the land during the ten year period. Given that Brombal's field next door was farmed during the entirety of the ten year adverse possession period, the Court did not find the future development potential of such land (and the Disputed Land) to be relevant.

This decision serves as a crucial reminder to purchasers and owners of real property to be aware of and conduct the appropriate due diligence depending on which system (land titles or registry) the real property is located in. Even if the property is not in the registry system, one can still be at risk of an adverse possession claim crystalizing prior to final conversion to absolute title in the land titles system.

(Almost) everyone wants to be a good neighbour. But if the property you own is not yet fully converted absolutely in the land titles system, be wary of simply looking the other way when your neighbour (or someone else) is using your property. If a part of your property is being used by another, talk to your lawyer, so that protections can be put in place to ensure that you don’t wake up one day on the wrong side of the fence.

The authors ask that all readers of this piece also take the time to read the poem Mending Wall by Robert Frost. It is one of the very few good poems about real estate.