By far, the most common problem we see with real estate transactions are issues connected to Real Property Reports (RPRs). The Alberta Land Surveyor’s Association (ALSA) defines a Real Property Report as “a legal document that clearly illustrates the location of significant visible improvements relative to property boundaries”. You can review a very useful brochure prepared by the ALSA here.
“A Real Property Report is necessary to determine compliance with municipal bylaws. A municipality reviews and endorses the Real Property Report and indicates if the improvements meet the requirements of the local bylaws. The property owner can then resolve any outstanding issues identified by the municipality. Early preparation of a Real Property Report significantly speeds up the process of selling a property”.
Too often, we see the RPR issue being dealt with too close to the closing date in real estate transactions. If a seller of a house or bare-land condo is unable to provide a compliant RPR in advance of the closing date, payment of the purchase price may be delayed, or the seller may have to agree to a holdback of part of the sale proceeds until the RPR matters are resolved. The relevant sections of the standard AREA Purchase Contract are as follows:
4.4 The Seller or the Seller’s lawyer will deliver normal closing documents including, where applicable, a real property report pursuant to clause 4.11, to the Buyer or the Buyer’s lawyer upon reasonable conditions consistent with the terms of this Contract. The Buyer or the Buyer’s lawyer must have an opportunity to review the real property report, where applicable, prior to submitting the transfer documents to the Land Titles Office and a reasonable period of time before the Completion Day to confirm registration of documents at the Land Titles Office and to obtain the advance of proceeds for any New Financing and Other Value.
4.11 As part of the normal closing documents, the Seller will provide the Buyer, regarding the matters described in clause 6.1, a real property report reflecting the current state of improvement on the Property, according to the Alberta Land Surveyors’ Manual of Standard Practice, with evidence of municipal compliance or non-conformance. This obligation will not apply to any transaction where there are no structures on the land.
Most lawyers acting for purchasers will want to review the RPR at least one week prior to the closing date, if not earlier. We encourage all sellers and realtors to provide the RPR as soon as an offer is binding, so that any issues can be dealt with well before the closing date. A new RPR costs about $800 for a surveyor to prepare, and the City of Calgary charges $169 for a compliance stamp. If you are updating an existing RPR to show a new feature on your property such as a deck or fence, the cost is about $500.
Typical problems with an RPR include a deck or fence or eaves encroaching on a neighboring property or utility right of way. Depending on the Encroachment, the City or neighbor could require that the structure be removed, or they may agree to enter into an Encroachment Agreement.
If the RPR is not fully compliant, lawyers will typically negotiate a holdback between $2000 to $10,000 or more depending on the nature of the encroachment, which is not releasable to the seller until the matter is resolved.
We encourage all parties to deal with RPR matters early on. This is the notice we put in our letters to seller’s lawyers: “Please be advised that it is our standard practice to not proceed to registration at Land Titles until we have reviewed the Real Property Report with Compliance with our client. Please forward the Real Property Report with Compliance to our office as soon as possible”.
Please contact us if you have any questions about RPRs.