What Happens if your Real Property Report does not Comply?
If you are selling or buying a home and have been told that there is no compliance or you have a non-confirming property, Don't panic. Below is a list of benefits and drawbacks with a non-confirming property which will help you make a more informed decision.
Benefits of Non-Compliance or Non-Conformation
- It provides documentary evidence supporting the warranties in a real estate purchase contract, and regarding issues of compliance with land use and development bylaws.
- It provides certainty for both the buyer and seller at the time of closing regarding compliance with development issues.
- It provides the opportunity for the buyer to have the seller remedy any deficiencies in this regard prior to or in conjunction with the closing.
- If a buyer decides to accept a certain deficiency, it provides both the buyer and the seller with the certainty of knowing exactly the eficiencies they are accepting.
- It can be used to address of the above issues regarding the structures and other matters shown on the RPR, even if a compliance certificate or letter is not current (the RPR is missing structures that have been added or altered since the RPR was prepared).
- It can be reused, provided there are no changes to the property, the buyer can use the same RPR with compliance when they sell the property. Even where there have been changes, the same compliance can be used to support the warranties in the AREA contract to the extent of all the s
- tructures and other matters on the existing RPR with compliance.
Drawbacks of Non-Compliance or Non-Confirmation
- It only provides information on compliance with municipal land use and related bylaws for the exterior dimensions of structures on the land.
- It does not provide any information that allows a municipality to confirm or deny compliance with any interior developments.
- It does not provide any assurance of compliance with restrictive covenants on title and compliance with any other municipal bylaws aside from the exact bylaws covered by the compliance stamp or letter.
- A request to the municipality for a certificate may lead to a requirement for substantial alterations, relocation or destruction of certain structures.
- Depending on the nature of the deficiencies, the buyer may not be able to recover any costs for required alterations or destruction from the seller.
- Many municipalities will only offer a limited form of compliance or non-conformance, and Some municipalities no longer provide compliance or
- non-conformance stamps or certificates.
- Under the AREA contract, the warranties provided by the seller only relate to development issues and not building code issues; and while there is some debate amongst lawyers on this issue, most take the view that any building code deficiencies including the lack of building code permits are the responsibility of the buyer.
- Can take several weeks to obtain and even if a rush fee is paid, it can still take several days.