What to consider about Real Property Reports?

Under all is the land. There is something about that beautiful and simple statement made in the preamble of the REALTOR^® code of conduct that helps remind us of the simplicity of scope in our industry. Let’s take a few moments to think through real property reports and their value to the land.

What is a Real Property Report?

A Real Property Report or “RPR” as it’s commonly referred to is quite literally a report on the real property. It is prepared by a land surveyor to adhere to strict standards of practice (substantially changed around 1996) to detail the exact boundaries of the lot or parcel of land. The surveyor uses existing survey markers or “pins” set by the government when the land was originally surveyed or subdivided to draw a very precise diagram of the piece of property and all its improvements such as houses, garages, decks, fences, etc. Due to the detailed nature of the report, the RPR is crucial for a person to clearly understand the boundaries of a property and the overall picture of the property as it is in space and time.

Current vs Existing 

There is only one type of RPR created in Alberta by land surveyors, however, they break into two categories based on their contents. What I mean by that is there are RPRs that are current, and RPRs that are existing. These two distinctions are extremely important because they speak to whether or not the property, as it is today, matches what the RPR shows EXACTLY. If the current state of land and improvements match exactly with the RPR itself, then the RPR is current to the reality of the property and is called a current RPR. If there is any change between the RPR and the property itself, yes, ANY change at all, no matter how small, then the RPR is no longer current but is now referred to as existing and is called an existing RPR.

Compliance vs Non-Conformance

Again, terminology is crucial here. Once the RPR is produced by the surveyor, then as part of the real estate transaction, it must be taken to the local municipality responsible for the area where the property is, for verification that the land and improvements in their current form, as represented by the current RPR comply with municipal bylaws and regulations. If everything is compliant, the municipality will either stamp the RPR with a compliance stamp, provide a compliance letter, or both, certifying it is compliant. In some cases, the municipality will grant compliance but note that something, like an old, detached garage, for example, is “non-conforming”. Don’t freak out, because this just means that at the time it was built the garage complied, but since that time the bylaws have changed, and it no longer conforms to today's standards.

A non-conforming element on an RPR is still acceptable with the understanding that the property owner can keep the garage, repair it, and maintain it, but never rebuild it in the same spot. The other status the municipality can assign is the dreaded “non-compliance”. This means something on the RPR does not comply with municipal bylaws but should or must. This is normally something like encroachments, easements, lack of permits, etc. In this case, the issue must be resolved, updated by the surveyor, and resubmitted for compliance again to achieve the coveted compliance certificate or stamp.

Working with Sellers 

The standard AREA seller representation agreements speak to the seller providing the brokerage a current RPR with compliance or non-conformance within ten days of signing. Seeing as most RPRs with compliance will take longer than ten days to produce this would mean the sellers should already have the document for presentation at the time of signing. We all understand this is not the case most of the time, so this is the perfect time to address getting an RPR and compliance immediately. Ideally, if the seller can have the RPR produced before receiving an offer it will allow addressing any issue discovered or add an additional level of comfort to the transaction for the buyer. Do not wait until you get an offer to start the process as this can delay closing and cost the seller thousands more in rush fees or other complications. 

Working with Buyers

The standard AREA residential purchase contract warrants that the seller already has a current RPR with compliance or will have one by closing. Want to avoid conflicts or complications at closing? Ask the seller's REALTOR^® to see a copy. If it exists you can review it with your buyer, if it doesn’t you may have just reminded the seller to get going on it. Either way, the buyer needs to know what they are buying and that it complies with municipal bylaws, and the compliant RPR is the only adequate vehicle for that.

Condominiums

Luckily condominiums don’t require an RPR correct? WRONG. That was for the shock value of course… the reality is that conventional condominiums do not require a real property report with compliance because they are common ownership of a single parcel that sits on the land itself. However, bare land condominiums with improvements DO REQUIRE an RPR with compliance because the land itself is the condominium unit. So, it is material to the transaction for the buyer to know the status of the land and improvements inside of their condominium lot. 

Title Insurance 

Well, this article is all about real property reports, but regardless of how you feel about it, title insurance is a current and growing reality in the Alberta real estate landscape. Is title insurance a replacement for an RPR with compliance? No, it is not. There is no other answer because title insurance simply moves the requirement of a compliant RPR down the road for a future owner. Looking at a title insurance policy does not tell you if your fences represent the property boundary, or if the pole shed in the back forty is yours or your neighbors, only an RPR can tell you that, and sooner or later someone needs to get one to see clearly what the property truly is. Although title insurance is the dominant reality in some small communities where there is no surveyor, and an RPR is sometimes ten times the cost of title insurance, it is still recognized that when certainty of boundaries is required, the RPR must be contracted for. Additionally, title insurance may provide some cover in the event an RPR will not be produced before closing or at all, such as a judicial sale, and may also cover other aspects of the property which are valuable to the buyer, so buyer clients should consult their lawyer about what the policy does and does not cover.

In the final analysis, whenever possible the best thing you can do for your buyer or seller client is to ensure a current RPR is produced early and reviewed for issues. A real property report is proof for the land, and under all is the land.