This page is intended simply to inform you about what a Real Property Report is and how important it is in a real estate transaction. Should you have any questions or concerns that are not addressed on this page, please contact our office.
A Real Property Report (RPR) is a legal document that essentially is a map of your property. It shows your property boundaries and the footprints of any permanent structures on the property. This includes the home itself and any garages, decks, sheds, fences, and pools that are part of the property.
Compliance means the legal compliance of the property – that is, confirmation that the property follows all relevant municipal bylaws. This may be a stamp on the RPR itself (Edmonton, Calgary) or it may be a letter; if it’s the latter, the document should be read carefully because it may indicate the property is actually non-compliant – in other words, it violates a municipal by-law. The letter will describe any problems, and it will list the proper procedure(s) in getting the problems fixed.
A “non-conforming” structure is something that is in violation of a current bylaw but was acceptable at the time of its construction (either because the bylaws have since changed or there was nothing addressing such an issue at that time). Non-conforming structures are legally fine and they may continue to remain as-is with no legal issues. However, if the structure is modified in anyway – for example, if you rebuild or heavily renovate the structure that changes its base or footprint – it must follow current regulations, and you may be required to obtain new or additional permits.
An encroachment occurs when a structure crosses the property boundaries and ends up partially on neighbouring lands. This is a legal issue as you are essentially using land you don’t own. Generally speaking, these issues are fixed by either getting an encroachment agreement (an agreement between both parties confirming that the offending structure can remain as-is indefinitely) or having the offending structure completely removed. This is normally at the seller’s cost.
For an encroachment with municipal land – for example, if your fence is too long and goes onto City of Edmonton property – this is normally easily fixed by getting an encroachment agreement between you and the City and having it registered against the property. For small encroachments, the fees are a few hundred dollars, but for more severe issues, they can be upwards of $10,000! As such, it is important that you have an RPR to consult prior to building any structures on the property.
Encroachments with neighbouring land are interestingly a bit more of a hassle to correct. The basic underlying principle is the same – an encroachment agreement should be done between the parties – but the neighbour must agree to the same. Also, because it’s not municipal property, the property may be considered compliant by the municipality; however, the standard real estate contract states the property being sold must not have any encroachments except where an encroachment agreement is in place and registered on title. The reason it is more of a hassle is because most neighbours don’t care about minor losses of land, and these fences may have been there for decades. Regardless of your contractual rights when buying property, we have seen more and more lawyers acting for sellers completely ignoring or side-stepping this issue.
No matter the type or severity of the encroachment, the agreement or the removal of the structure will make the property legally acceptable. Keep in mind, though, that the property was bought with that structure on the property; if you’re buying the property and you lose that structure (a fence, for example) you should be compensated for the loss.
The RPR can be done by the surveyor of your choosing. On average, the Report is around $500.00 by itself (as of 2018) although the price ranges depending on the location of the property and the surveying company of your choice.
Compliance prices also vary depending on the municipality and the urgency of your request. The base price is generally around $100, and the process takes around two weeks. Should you require it sooner, the request can be done on a rush basis and it normally takes around 3 business days to complete. Rush orders are normally double the cost of regular orders.
Should you prefer, you may request your solicitor to order the RPR on your behalf. This allows your solicitor to handle the responsibilities of ordering the above; however, additional disbursements (such as couriers) may be charged.
Title insurance is an insurance that protects against possible legal deficiencies with the property that were unknown at the time of possession. In many cases, title insurance will be a requirement for the lender and optional for you, the buyer. The most common issue is with structures that were built or amended on the property without having the proper building and development permits obtained. Assuming that a policy was ordered for the buyer, you would be covered for the costs of getting the proper permits. Like any other insurance, the work would have to be done by you (or whoever you hire), and the costs would have to be claimed after the fact. Please note that they may refuse to reimburse costs if you fully accepted responsibility for any deficiencies on the contract. Certain contracts may include clauses that force you to accept such issues; as such, it is recommended that you read your contract carefully to be fully aware of your responsibilities under the contract.
Title insurance covers more than what an RPR with Compliance would show. For example, title insurance covers title and mortgage fraud — if someone tries to steal the title to your property or attempts to mortgage it without your consent. While this would be difficult in Alberta, as we still use a manual “hard copy” system (as opposed to other provinces who have an online system), we cannot discount the possibility. Title insurance may also cover building and safety code violations (for example, if a previous owner attempted to renovate the house and did it poorly), if these violations end up costing you money. Because of the additional coverage, you may find an owner policy beneficial.
The cost of title insurance is roughly around $250 for both a lender and owner policy. The seller may pay for this cost fully (see the next question). However, if the lender requires you to get title insurance, it is your responsibility to pay for the same, although you have option to order or decline a personal policy. The owner’s policy is, generally, always optional, although there are instances where your lawyer (including us) would heavily recommend it. Normally, this is ordered by your lawyer, on your and/or your lender’s behalf.
One more thing to note is that title insurance will only cover the specific owner and/or lender listed on the policy. If you decide to go with a new lender for your mortgage, or if you sell your property, you will have to order a new policy of title insurance or order a new RPR with Compliance at that time.
There are pros and cons to each, and you must choose what’s best for you in your circumstance. The RPR is a permanent document – that is, as long as no other permanent structures are added, the RPR remains legally valid. The removal or demolition of structures does not make the RPR invalid. If the RPR with compliance showed a deck or a fence on it that has since been fully removed, it’s impossible for there to be any compliance issues that arise for a non-existent development. If you decide to add anything onto the property, though, you will have to obtain a new RPR or title insurance for the eventual purchaser.
As previously stated, the main benefit with title insurance would be additional coverage by the insurance provider. For example, the insurance company may cover improperly done renovations (including electrical work) or issues from neighbours incorrectly building fences overlapping onto your property (so that they’re encroaching). However, as previously stated, title insurance is not permanent, so in the event of a mortgage change or a sale, a new policy or RPR will have to be ordered.
If you are buying a property to completely rebuild it or make substantial renovations/changes to the property, neither the RPR with Compliance nor title insurance would be of much long-term value, although the RPR may be needed to determine the property lines/boundaries. Please note, however, that if you are buying with a mortgage, one or the other will be absolutely required. Please also keep in mind that after the property is renovated or rebuilt, you would have to either order a new RPR or title insurance for the eventual purchaser.
Generally, this is not recommended. This is because most purchasers use a mortgage. At the time the mortgage is funded, the property needs to be acceptable to the lender, either with a current and compliant RPR or with title insurance. If you are buying with a mortgage, and if you accept the RPR as-is, you must spend at least $100 – $150 to get title insurance for the lender (a personal policy is also strongly recommended). There should be no reason for you, the buyer, to spend more than you need to.
However, if you are buying the property to demolish and/or rebuild it, and if you are buying with cash, accepting the RPR as-is should not affect you negatively. If you are demolishing it soon after possession, compliance would be of little use, and since there is no lender, you (and any other buyers) are the only person or people you need to answer to.
Yes, but there are multiple factors to consider. There are generally three options available to you:
- Force the seller to do a financial holdback (meaning one of the lawyers withholds money from the seller until the RPR with Compliance is provided to you);
- Force the seller to pay for title insurance, with the RPR & Compliance to follow later (which means that if there are compliance issues, you may be responsible for fixing them, but you would be compensated for the same); or
- In certain circumstances, under certain contracts, you can delay closing until the RPR is provided.
It is strongly recommended that you contact your lawyer to discuss the above, as not all options are available for all transactions.
Most builder contracts do not call for the provision of a Real Property Report with Compliance. They may offer one as a courtesy, but it is not guaranteed. Please note that in such a case, title insurance will essentially be mandatory.