What the Heck Is a Real Property Report and Why Should I Care?
In the Province of Alberta, a Real Property Report (RPR) is a required part of the standard Multiple Listing Service (MLS) real estate purchase sales contract. It is a document that was formerly called a Land Survey because a professional group known as the Alberta Land Surveyors’ Association produces it. Surveyors use extremely precise measuring tools to document your property by creating a two-dimensional drawing. This drawing is signed and stamped with the surveyor’s professional seal and provides very accurate details of the dimensions of your property, specifying the location of all buildings and improvements. It shows not only the main building, but also any decks, fences, retaining walls, etc., all in relation to the property boundaries.
Just having a surveyor create an RPR isn’t enough for real estate transactions. The next step is to submit two copies of the RPR along with an application and application fee to the local municipality with a request for compliance. Some municipalities stamp the RPR if it complies, some issue letters, and some do a combination. The bottom line is that is the municipality will advise you whether or not the property complies, is nonconforming, or is noncomplying. As long as the property complies or is nonconforming, that will meet your obligations under the current MLS contract. If the property is noncomplying other steps that are different for each situation must be taken to attempt to correct the noncompliance.
Why you should care is because, per my above comment, the MLS real estate purchase contract from September 2016, as approved in conjunction with the Alberta Real Estate Association, requires you to provide this document. New RPRs & compliance run anywhere between $500 +/- to $1500 +/- depending on where your sale property is located. Depending on surveyor busy-ness and the processing time that municipalities require, obtaining a new RPR & compliance could easily take a month. If your property is not located exactly as it ought to be on the lot (perhaps a portion encroaches on private or public property, perhaps you are missing permits, etc.) then you may very well experience delays or even an inability to close your real estate deal. So, yes, a clean, no issue RPR & compliance is very important!
Can I Use My Old RPR & Compliance?
Maybe. It is essential to discuss this point with your realtor before signing your listing agreement.
- If you received an RPR with proof of municipal compliance when you bought your property, and
- if you have made no changes to the exterior footprint of your property as described on the RPR, and
- if you have an original of the RPR and proof of compliance (or good legible copies of both) and if the documents are not too old, then;
- there is a good chance you can reuse your RPR and proof of compliance when you sell.
Show your realtor what you have; confirm you have made no changes. Then, work with your realtor to delete the clause in the contract that calls for you to supply a real property report and proof of municipal compliance. Replace that clause in the terms section of your contract with a clause something like, “seller will supply only the attached RPR dated (insert the date on the RPR) and proof of municipal compliance dated (insert the date of the compliance).” PLEASE NOTE, this is only suggested wording for a particular circumstance. Make sure any warranty clauses match up with what you are providing. Run this by your realtor or your lawyer to make sure you get the wording right.
What Happens to My Real Property Report If I Have Added a Garage, Fence, Deck, etc.?
If after purchasing your home you added a garage (or a fence or a deck or an addition or, or, or…), then if you got an RPR & compliance when you bought, according to the September 2016 contract, that RPR & compliance is now not acceptable when you sell.
What To Do If My Real Property Report Is Out-of-Date?
The most straightforward solution is to get a new RPR. You can call the surveyor who did the RPR originally or hire a new surveyor. Check for pricing to see if the original surveyor might give you a bit of break on pricing. Once the new RPR is done showing whatever changes you made, you can ask your surveyor (or do it yourself), to make a compliance application to your local municipality. Typically that requires a couple of original copies of the new RPR along with an application and an application fee.
Surveyors often take a couple of weeks to do a survey, and compliance requests also typically take a couple of weeks, so that is approximately a month. Keep that in mind as you work your way through timing for your sale. Heads up, if the change to your property requires a development permit or building permit or both, if you didn’t get those permits when you made the improvement, your application for municipal compliance will most likely be rejected. The municipality will most likely also say that you have to obtain permits before they will process your municipal compliance application. Every municipality in Alberta has a slightly different permit process so you will just have to work your way through that. Getting permits will add at least 2–4 weeks to your process. Check with your municipality.
Lesson learned, if you are selling and you mean to provide an RPR but you have added something to the outside footprint of your property (like a garage) and you didn’t get permits, give yourself at least two months to get this sale requirement in order.
What If I Don’t Want To Get A New RPR & Compliance?
This is a negotiable matter. In terms of ensuring a smooth sale, your best position is to provide a brand-new RPR & compliance. Your next best position is to provide an older, legible RPR & compliance that continues to show the property exactly the way it is today. Your third position is to provide an RPR & compliance that is not up to date, delete the standard RPR requirement in the contract, and modify the contract to require your buyer to accept what you are providing. Again, this is a negotiable matter. The buyer might accept your outdated RPR & compliance or they might not. They might request or you might offer to provide Title Insurance in addition to the outdated RPR & compliance or in lieu of those 2 documents.
Unless you are providing a brand-new RPR & compliance, this is a very tricky area contract law. Discuss in detail with your realtor or your real estate lawyer for further information. At RMLO Law LLP, we deal with these issues all the time, so get in touch if you’re dealing with RPRs.
Now, What About This Thing Called Title Insurance?
A big topic but here are some basics:
Title Insurance is a relatively new concept in Alberta. This type of insurance policy insures a buyer and the buyer’s new lender (if any) against the enforced removal of most improvements to the property. For instance, if the garage encroaches on the neighbour’s lot or on municipal property, and if the neighbour or municipality bring legal action to force removal of the encroaching garage, then Title Insurance will pay for that removal. Title Insurance also covers other things like outstanding work orders, taxes, or other financial encumbrances that somehow have not been paid out and removed from the title, as well as title fraud both before and after closing.
Title Insurance is often thought of as a substitution for an RPR & compliance. In reality, Title Insurance is a different product and deals with different issues. However, buyers often accept Title Insurance in conjunction with or in lieu of a brand-new RPR & compliance.
Other Title Insurance points are:
- Title Insurance can be obtained even if there is an existing RPR problem.
This is a matter to discuss with the Title Insurance underwriters, which typically requires an experienced real estate lawyer. - The seller usually pays for Title Insurance.
The payment is made by way of credit to the buyer on the Statement of Adjustments - The buyer’s lawyer orders the Title Insurance policy.
The Title Insurance premium is payable one time only. Title Insurance covers the buyer as long as s/he owns the property and the lender as long as their mortgage is registered against the title.
Further Information on RPRs
This post on Real Property Reports is a very brief and simplified summary of a complicated topic. For more information:
- View previous posts on this website that include: a 3-part series of Tales from the Trenches podcasts (one, two, three), a related podcast geared towards sellers (here) and a short video featuring questions from a realtor about RPRs.
- For the Alberta Land Surveyors’ Association viewpoint, visit their website: https://www.alsa.ab.ca/
- From the viewpoint of a Title Insurance provider, Google companies like First Canadian Title, Stewart Title Insurance, or many others.
If you’re dealing with Real Property Reports, municipal compliance, and/or Title Insurance, get in touch with Barry today. He’s senior counsel at RMLO Law LLP, a boutique Edmonton law firm with a specialty in real estate.