Sellers must ask themselves whether they require a new or updated real property report before placing their home on the market. Does it matter how old the survey is? Are photocopies ok? You just built a deck or fence – do you need a new RPR?
The following is an article entitled “Practical Aspects of Real Properties” written by Lubos K. Pesta, Q.C. of Walsh Wilkins Creighton LLP. Although the following is directed towards REALTORS, the information is beneficial to sellers as well.
Practical Aspects of Real Property Reports
In selling a home the seller provides a key warranty to the buyer that all buildings and other permanent structures on the lands are within the boundaries of the property, do not encroach into a utility right of way or other easement, and comply with all municipal setback requirements. (6.1(e) of the AREA Residential Real Estate Purchase Contract). A building encroachment or non-compliance problem that cannot be remedied prior to closing creates a risk that either the municipality or an affected neighbor will require the structure to be moved or demolished. For that reason these types of building location problems (and breaches of contractual warranties) are viewed by the courts as material title defects which can entitle the buyer to back out of the purchase obligation.
For decades survey certificates and, more recently, Real Property Reports with evidence of municipal compliance have been utilized in home closings to verify that the seller’s warranties respecting building location are true. Unfortunately from time to time real estate transactions are delayed and even placed in jeopardy due to a Real Property Report either not being available on time or disclosing a building location problem which cannot be fixed prior to closing.
Prior to setting out a basic practice guide with respect to Real Property Reports, I wish to mention that I recognize that there are parts of the province where it is either cost prohibitive or not possible to secure new Real Property Reports or updates on a timely basis. For that reason, unique approaches have evolved in various locations to address the problem including individuals drawing new additions on surveys themselves or relying on title insurance. The following guidelines will, however, be applicable to the vast majority of transactions, including home sales in Edmonton and Calgary, where lawyers have adopted standardized RPR rules of practice for home closings.
If an existing RPR is available, then once obtained it should be carefully reviewed with the seller and compared to the current state of improvements on the property. If structures (including decks and fences) were added since the RPR was prepared, a determination should be made as to whether an update is required. Some rules respecting the acceptability of existing RPRs are as follows:
- legible photocopies are acceptable (it doesn’t have to be an original document);
- the age of the RPR and the age of the Stamp of Compliance don’t matter so long as the RPR continues to reflect the current state of improvements;
- the removal of an improvement since the creation of the RPR (i.e. the RPR shows more than the current state of improvements) doesn’t necessitate an update;
- within urban centers all perimeter fences have to be shown (the fact that the neighbor may have built the fence is irrelevant);
- certain improvements such as movable sheds, landings, non-encroaching driveways and cross-fences are not required to be shown on the RPR, but it would be best to consult with a lawyer on these matters.
3. If an RPR cannot be located then a new RPR should be ordered by the seller, the listing agent or the seller’s lawyer and submitted to the municipality for confirmation of compliance as soon as practicable. Ordering an RPR early will minimize the cost involved and, more importantly, allow the seller to discover and, hopefully, remedy building location problems prior to the closing day.
4. When listing a condominium unit, it is essential for the listing agent to obtain and review a copy of the condominium plan. If the condominium plan shows that the units which were created are lots (bare land condominium) rather than buildings (conventional condominium) then the same RPR obligations that apply to the sale of a single residential home will apply to the sale of the condominium unit. If the condominium plan shows buildings rather than lots then an RPR will not be required, but a careful review of the plan will allow the industry member to determine whether titled parking stalls and storage lockers were created which are relevant to the sale of the property.
5. Finally, if any building location problems are discovered, most lawyers would appreciate being notified at an early stage (even without a contract in existence) to enable them to assess the risk and assist in the remediation of the problem. If you have any questions or concerns respecting the requirement for a new or updated Real Property Report or any potential building location issue, consulting with your client’s lawyer early will help to minimize your liability risk.
Lubos K. Pesta, Q.C.
Walsh Wilkins Creighton LLP
Phone: 403.267.8432 Fax: 403.264.9400
Thanks again to Lou for such informative articles.
Tips to Save Time & Money
If it has been determined that you need an updated RPR, you can save yourself some money. On your RPR there will be the company that surveyed your property. Call them and ask for the cost of an updated RPR and compare with the costs of new RPR’s from any Alberta Land Surveyor. You’ll probably save yourself $150 or so using the same surveyor and getting an update instead. Here’s a recent example of costs from a surveying company my Seller was using:
- Updated RPR: $410 + GST
- New RPR: $560 + GST
- Approximate timeframe for completion: 3-4 weeks
Once you have a new or updated RPR, you’ll need to get a Certificate of Compliance from the City. The cost is $97+ GST. You can go down personally to City Hall, bringing at least 2 copies of the RPR with you:
The City of Calgary
Development & Building Approvals
Customer Advisory Services Counter
3rd Floor, Municipal Building
800 Macleod Trail SE
Calgary, Alberta T2P 2M5
For more information on Certificates of Compliance, please visit the City of Calgary website.
Some more great information and FAQ’s are available at the Alberta Land Surveyor’s Association website.