Should I get a Real Property Report When I sell my Home?
Traditionally a Real Property Report (RPR) and compliance letter or stamp (or non-conformance, referred to throughout as simply compliance) has traditionally been the preferred method of providing security to a buyer. However, as some municipalities no longer offer compliance documents, the contractual requirements to provide a RPR with compliance documents are increasingly difficult for sellers to meet. It is important to ensure that you are aware of the alternatives, such as title insurance, and that the appropriate steps are taken to ensure that all parties involved are properly protected.
RPRs, compliance, and title insurance are all useful. On their own, each has its distinct benefits and both buyers and sellers are best served when all three are in place. However, this is often not practicable or possible. It is important for buyers and sellers to understand both the benefits and shortcomings of each one.
Benefits of a Real Property Report
- It provides a complete disclosure of all structures on the property, the exact location of property lines and the location of fences.
- It discloses the exact location of non-physical items such as easements and utility right-of-ways.
- It shows any encroachments by the subject property onto neighboring property (and vice versa), or easements and the exact imensions
- of the encroachments.
- It provides certainty to the buyer so they know exactly what they are buying and an opportunity to remedy any deficiencies such as encroachments before or concurrent with the closing of the purchase and sale.
- If a buyer decides to accept a certain deficiency, it provides both the buyer and the seller with the certainty of knowing exactly the deficiency they are accepting.
- Provides documentary evidence to support the warranty in the standard AREA contract.
- Even an RPR that is not current (missing structures that have been added or altered since the RPR was prepared) can be used to address all the above issues regarding the structures and other matters shown on the RPR.
- The RPR can be reused provided there are no changes to the property.
Drawbacks of a Real Property Report
- On its own, it does not provide any disclosure or information as to the compliance issues which are warranted by the seller in the AREA contract.
- It does not provide any information on the interior portion of any of the structures of the property.
- It does not provide any information on “hidden items” on the property, such as the location of septic tanks or other items below ground level.
- The cost of an RPR is typically many times higher than the cost of title insurance, especially in outlying areas.
- During boom times in the oil industry, no matter the price someone is willing to pay, it can be extremely difficult to find a surveyor to do an RPR in certain parts of the province.
- It does not deal with many of the items covered by title insurance.
- It can take several weeks to obtain and even if a rush fee is paid, it can still take several days.