A commonly heard term in real estate: ’Buyer to accept the property as-is, where-is ...’, but how does this relate to Real Property Report (RPR) and Compliance issues? [Background: an RPR is constructed by a certifed land surveyor where they chart structures and dimension in relation to the property boundaries; Compliance is a stamp issued by the municipality after review of the RPR is complete and once all of the non-conforming or non-compliance issues are noted or addressed]. Below are important risks to understand and discuss with one's REALTOR® and lawyer before deciding to ever purchase a property without an RPR and Compliance provided by the Seller:
(1). Are there encroachments or encumbrances (e.g. garage or fence built partly on neighbor property) requiring an encroachment agreement with a neighbor or municipality (with expense to remedy) before compliance is achieved?
(2). Are there any structures, additions, decks, garages, etc. that were built without building and / or development permits?
(3). Are there any non-conforming structures, additions, etc. that are not permitted under the current municipal zoning bylaws for the property?
(4). If title insurance is accepted from a Seller in lieu of an RPR and Compliance, does the policy (like most title insurance policies) only take effect in the rare instances where the municipality requires a homeowner to take out a permit, enter into an encroachment agreement, and / or remove, move, or change a non-conforming structure in accordance with bylaws or special order?
(5). If one decides to sell their property in the future, a high majority of Buyers will require an RPR and Compliance as a term of sale so are preparations made to expend the cost to order an RPR and Compliance plus any other miscellaneous costs for handling unforseen permit and encroachment issues?
In summary: Sellers should speak first with their REALTOR® and make sure they have a current RPR and Compliance before accepting a deal pending from a Buyer, and if they do not have one then get one ordered ASAP since it can take several weeks, sometimes months if surveyors and the muncipality are busy. Conversely, Buyers should speak first with their REALTOR® and make sure that any offer to purchase includes a Real Property Report and Compliance from the Seller as a term of sale. This way, if there are any issues prior to closing the Seller would need to address them via holdbacks and / or money back to the Buyer in exchange for the Buyer accepting the Seller’s breach. In rare instances where Sellers refuse to provide a Real Property Report and Compliance at the time of the offer, Buyers must make sure their offer reflects the risks and it is important to speak with their REALTOR® and lawyer to know all of the risks involved with purchasing a potentially non-conforming and / or non-complying property.
[Article written and ©2009 by Kelly Grant, M.Eng., ABR, NCSO, P.Eng. - REALTOR® at MaxWell Realty in Edmonton, AB]
Disclaimer: for those readers not currently represented by another licensed REALTOR®, to obtain more information on this topic and / or if you are serious about selling or buying in the Greater Edmonton Area, call Kelly at 780-414-6100 (pager) or send Kelly an email to SOLD@KellyGrant.ca to schedule a confidential appointment.