Guest author Stan Galbraith of Galbraith Law is back! Earlier this year, Stan did a great series of articles for the Edmonton Real Estate Blog on foreclosures. He is back with a series on Real Property Reports and Title Insurance. This is the first of three articles in the series:
What is a Real Property Report (RPR)? And what purpose does it serve in a residential real estate transaction?
An RPR provides a graphic representation of all the improvements and features of the property. Years ago, it was called a Building Location Certificate and all it showed was the foundation lines of the buildings on the property and the lot lines. Now, it is called a Real Property Report and provides a much more comprehensive report on the real estate or real property.
An RPR provides information such as the location of utility right-of-ways and easements. It also shows boundary fences, the overhangs of eaves and additional improvements such as swimming pools and hot tubs. In other words, it is a complete report on the real property or real estate.
Typically, in most residential real estate transactions in Alberta, this report is submitted to the local municipality for a compliance stamp or certificate. This is a confirmation from the municipality that the buildings and improvements on the property comply with local zoning and setback regulations. They will also verify whether permits are in place for all the structures.
The standard Real Estate Purchase Contract (REPC) contains warranties.
The seller warrants the buildings and other improvements do not encroach on any neighboring land. They also warrant the location of all buildings and improvements complies with all relevant laws. The RPR provides the proof that these warranties are true and correct. As such, an RPR provides valuable information to a potential buyer.
Where the deficiencies are noted in the report, the buyer can insist the seller take action at the time of the purchase to remedy these deficiencies. For example, when the RPR discloses encroachment onto either municipal or neighboring land, the buyer can look to the seller to obtain an Encroachment Agreement at the time of closing.
Without the report, the warranties lose much of their impact. Discovering a deficiency many years later makes it very difficult to pursue the seller. For example, limitation periods may have expired or the seller may simply be difficult to contact and pursue.
Make note that the warranty in the standard REPC only extends to encroachment onto neighboring lands. There is no warranty offered regarding encroachments onto the land that is bought and sold. In other words, if the neighbor’s deck extends into the backyard of the purchased property, there is no obligation on the seller to do anything about this. The buyer has the option, once they obtain Title, of negotiating with the neighbor to either remove the encroaching deck, or leave it as it is and put an agreement in place to cover the issue.
Most lawyers are of the view that an RPR provides the best solution on every real estate deal. They say that is the only way to have the certainty required by the buyer. Certainly, in most cases, it does provide certainty. However, in my view, it's far from the ideal solution on every deal.
In the next article we will look at Title Insurance and what it has to offer.
About the author: Stan Galbraith is a lawyer with over 25 years of experience. He was admitted to the Alberta Bar in 1983 and has operated his own law office since 1988. Stan has a wealth of experience ranging from litigation and appeal work, to teaching and writing. He has now left the world of litigation behind and works with commercial and residential Realtors and their clients on closing their transactions. He also practices extensively in the areas of small business and wills and estate planning and administration. You can find his website at www.galbraith.ab.ca.
