Smith & Stanton Snippet
No 5 - What’s in a Sewer Main?
Standard Contract Terms:
Under clause 7.2 of the Terms of Contract a Seller warrants that the Property is sold free of Encumbrances other than the Title Encumbrances and Tenancies.
Encumbrance is defined in clause 1.1 to include unregistered and statutory encumbrances.
Question:
What is a statutory encumbrance?
Answer:
A statutory encumbrance is a right created by legislation and includes for example, the rights of a Local Authority to enter onto a property to perform work on sewer mains or other
pipes, connections or structures situated under the surface of the Land.
Law:
Micros v Diamond [1970 NSW decision] held that the existence of a sewer main under the surface of the Land constituted a defect in title which should have been disclosed in the Contract and the failure to do so allowed the Buyer to terminate the Contract and claim return of the Deposit.
Alert:
It is important when you complete a Contract, to ask a Seller whether there are any sewer mains, combine or shared sewers or stormwater pipes or connections (not standard house connections) under the surface of the Land and if there are, then these should be disclosed in the Title Encumbrances section of the Contract.
Produced by:
- Anita De Domenico – Conveyancing Manager
- Naomi Wright – Conveyancing Support
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