Real Property Reports – What are they and why do you need one?
What is a Real Property Report?
A Real Property Report (RPR) is a survey completed by a land surveyor (a member of the Alberta Land Surveyors Association). The RPR shows the visible improvements made to the property and the property’s boundaries. As per the current standard Alberta Real Estate Association (AREA) contract, a RPR has to be provided by the Seller of a property to the Buyer of the property or the Buyer’s lawyer giving the buyer or buyer’s lawyer a “reasonable time to review the RPR prior to submitting the transfer documents to the Land Titles Office”. Further, the standard AREA contract has a warranty that the seller warrants that all buildings and improvements are on the land and not on any easements, rights-of-way, or neighbouring lands. A Real Property Report is the only way to verify this warranty.
The key characteristic of the Real Property Report (RPR) is that it should be up to date i.e. the RPR should reflect any changes/additions to the property. Does the RPR represent the state of the property as it is now i.e. does it show all fences, decks, garages, driveways, sheds, patios, eaves, cantilevers, air conditioning units etc. that are on the property? If not, the Seller must provide a new RPR with evidence of municipal compliance. If the RPR has been completed recently it usually shows all improvements. (Buyers need to be careful to ensure that the Seller has ordered a RPR after a deck or fence has been built or after changes were made to the property.) The RPR should be compared with the actual site/property to make sure improvements that are on the property are shown on the RPR. If a fence or deck has been removed, it does not need to be shown on the RPR but if one has been added, it must be shown on the RPR.
Why have a Real Property Report?
Without a Real Property Report and Certificate of Compliance, it cannot be ascertained whether the buildings and structures purchased are located within the boundaries of the Property; whether the Property is free from encroachments by buildings or structures on adjoining properties, on easements or on rights of way; or that the property complies with applicable zoning regulations. Only an up-to-date RPR provides that security.
Buyers often ask if title insurance can be purchased in lieu of a RPR. Title insurance will only cover certain defects and will only give you financial protection if problems arise in the future. Title insurance policies have exclusions and exceptions. For example, most title insurers will not provide insurance coverage for an encroachment on to the property unless a government authority requires that the encroachment be removed. If a structure from your property encroaches on to a neighbour’s property, the neighbour will ask to have the structure removed, not a government authority. Therefore, title insurance would not cover the removal of the structure and the owner would have to pay the costs for the removal or the costs for remedying the encroachment. Alternatively, an RPR provides information about property compliance issues up front so issues can be dealt with before closing. Buyers may want to have an RPR along with title insurance coverage as title insurance may cover internal non-compliance issues that do not show on an RPR (such as lack of building permits or failure to meet building code on renovations).
When should you order a Real Property Report?
At the time of listing the property, the Seller should locate the RPR. If the RPR cannot be found, a new RPR should be ordered, as soon as possible. Survey companies can take up to three weeks to survey properties and complete the RPR. Ordering a rush RPR will incur additional costs. After the survey is completed, it must be submitted to the municipality for compliance. This process can take an additional week or two. The sooner the RPR can be ordered and submitted for compliance, the sooner the Seller and the listing agent can review it to ensure that there are no problems with encroachments or zoning or remedy any problems that are required to be resolved.