One essential component of a real estate transaction that is often forgotten or overlooked (until the lawyers get the file) is the Real Property Report, often referred to as an RPR.
A Real Property Report is a legal document that clearly illustrates the boundaries of the property and includes the location of improvements, such as garages, sheds, and fences, relative to the property boundaries. It will have a survey that illustrates the physical features of a specific property and include a written statement detailing the surveyor's opinion or concerns about property boundaries or structures.
The other part of the Real Property Report that is often required as part of the real estate contract is the certificate of compliance. The stamp or letter of compliance by the municipality confirms that the building(s) location conforms with the requirements of the municipal land use bylaw. There are numerous reasons your property may be found to be non-compliant. Detached garages being built to close to property lines or over an easement/utility right-of-way and fences crossing property lines are common sources of non-compliance. Not having building permits in place can also result in non-compliance.
I admit it happened to me in the early stages of my career. During the excitement of meeting with the home owner and discussing staging tips, pricing, advertisements and other more interesting and fun topics the subject of the Real Property Report was often forgotten or delayed. Now I make sure it is a question I ask before listing a house for sale.
Now I realize that all of this seems very boring and might only appeal to some of my lawyer friends but looking into this and dealing with it ahead of time can save you, your realtor, your lawyer and the buyer a lot of headaches and potentially money.
Having this report available when listing can also make your property more salable and attractive to buyers. I have had other Realtors tell me that one of the reasons their clients passed on my listing was because we were offering title insurance instead of a Real Property Report. (more to come on title insurance in future blogs)
"My RPR is non-conforming (non-compliant), what do I do now?"
No need to stress! Many Real Estate transactions occur with non-compliant RPRs. When you have a compliance issue you can apply for setbacks/relaxation permits or an encroachment agreement. You can check with your lawyer to see if this is necessary. In many instances the municipality will provide you a letter that says something along the lines of... "we know your property is non-conforming because of "XYZ". It would be best if it was compliant/conforming but it is okay and no further action is needed at this time. If you make changes to "XYZ" or tear down and rebuild "XYZ" you will need to make it compliant at that time."
The best way to handle this situation is to make everyone is aware of the non-compliance issue in advance. The buyer knows up front what they are purchasing and how it could possibly affect them in the future and the lender (usually the bank) knows the situation about the property they are financing.
Here is a quick summary of the main benefits of a Real Property Report:
- location of the property boundaries and improvements are known
- any issues with the property or adjacent properties such as easements or encroachments are revealed
- helps buyer determine if the property can accommodate additional improvements in future
- makes property more attractive to buyers as they can have more assurances about what they are buying
- some banks or financial institutions will not finance a property without an RPR
What a Real Property Report does NOT provide:
- information on interior portion of the structures. For example extensive renovations done inside home.
- information on hidden items such as septic tanks. Are they actually located fully within your property?
Real Property Reports are the not-so-sexy but important side of Real Estate. There is a reason they don't talk about them on HGTV as it wouldn't make for such great TV. Unless I am watching then I am dialed in. :)
Please make sure you receive advice from your lawyer before making any decisions on how to proceed with a Real Property Report containing compliance or non-compliance and especially before signing a contract involving one.
Your Realtor can guide you in the right direction and provide insight but ultimately your lawyer will be able to provide the best legal advice to protect your interests.
A registered land surveyor is the only individual who can legally prepare a Real Property Report. Please visit the Alberta Land Surveyors Association web site for more information: www.alsa.ab.ca
About the author: Peter M Leveille is a licensed real estate agent in Edmonton, Alberta, Canada. He has been selling real estate for 15 years and is the Broker and Owner of AB Realty LTD.