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What is a Real Property Report?
A Real Property Report (also known as the RPR) is a legal document that clearly illustrates the location of significant visible improvements relative to property boundaries. It is a plan or illustration of the various physical features of the property, including a written statement detailing the surveyor’s opinions or concerns.
Who needs a Real Property Report?
Part of the standard real estate contracts in Alberta will have a term in the document states the seller will provide a current real property report with the compliance report to the purchaser upon closing. Prior to putting your home on the MLS System and/or Realtor.ca, Sellers should order a new RPR to protect themselves from potential future legal liabilities resulting from problems related to property boundaries and improvements. YourREALTOR® can assist you with this process to ensure your property complies with municipal requirements.
Do I need a Real Property Report for a Condominium?
Bareland Condominiums require Real Property Reports. Conventional Condominiums do not require an RPR.
How does a Real Property Report protect you?
Purchasing a property may be the largest financial investment you ever make. With a Real Property Report, owners are aware of any boundary problems. They know whether their new home is too close to the property line, or part of their garage is on their neighbor’s land or vice versa. Since legal complications may occur if a sold property fails to meet requirements, a Real Property Report protects the seller.
What is on a Real Property Report?
The legal location description of the property and municipal address, dimensions and directions of all property boundaries, any improvements on the property, right-of-way or easements, any visible encroachments, a duly signed certification and opinion by an Alberta Land Surveyor and a permit Stamp where applicable.
How much does a Real Property Report cost?
The amount of work to prepare a Real Property Report varies between properties. Lot size and shape, number of buildings, natural features, age and availability of the property boundary information all affect the cost. However, if you are planning on selling your home in the near future, the sooner you order your Real Property Report, the more economical it will be plus any problems can be identified and resolved before a sale is finalized.
What Is a Stigmatized Property
In real estate, a stigmatized property is a property which buyers may shun for reasons other than its physical condition or features. These reasons can include the death of someone who was occupying the home to a murder which has taken place inside the property. Some buyers believe the house may now be haunted.
When a death occurs inside a home, it may not always be disclosed to a buyer. Although when there has been a murder, it is usually public information and can be found on the net. According to the Real Estate Council of Alberta, a murder on the property does not need to be disclosed.
Many jurisdictions recognize several forms of stigmatized property and have passed resolutions or statutes to deal with them. One issue that separates them is disclosure. Depending on the jurisdiction of the house, the seller may not be required to disclose the full facts.
When a home is considered a stigmatized property, the selling value may be decreased to attract more buyers. These houses are priced accordingly and purchasing one for a lesser real estate cost, financially benefit the buyers.
Types of stigma may include houses formally used in a crime, such as a drug house or brother. Foreclosures where debt collectors are unaware that a debtor has moved out of a residence and may continue their pursuit at the same location
Is it time to Say Goodbye to Your Real Estate Agent
In all relationships, ending a relationship can sometimes be difficult, especially when you are under a signed agreement. Buying and selling homes is more than working with a friend. It is also about making the right choices for yourself and your families best interests. There are expections when relying on Real Estate Agents to help you Buy and Sell and professionalism should be at the top. If you are unhappy with your real estate agent, there are a few things you can do.
First, communicate your concerns and try to mutually solve the issue with your REALTOR®. If you are having difficulty reaching your real estate agent, contact their brokerage. The agreement you entered into is with the Brokerage, not the real estate agent and the brokerage may re-assign a different REALTOR® to you. Most Edmonton Real Estate Brokers are very reasonable and do what they can to help you.
Your agent may also choose to terminate your Listing Agreement or Buyers Brokerage Agreement without any compensation or there may be a clause in your contract with a set dollar amount to terminate the agreement to cover some of the expenses which cost your agent to market the home.
Once you receive the cancellation or termination document, in the province of Alberta, you are free to enter into another agreement with a different real estate agent. Read your termination over before signing. There may be parts in your cancellation agreement that may still be in effect even after the termination.
Below are signs telling you that it may be time to fire your real estate agent.
A breach of Fiduciary Duties (The consumer Relationship Guide) which forms part of your agreement you originally signed with your REALTOR
You have expressed your concerns repeatedly which have not been addressed or worse, have been completely ignored by the other party.
You have no communication with your real estate agent, leaving you in limbo, not knowing what your REALTOR® is doing to sell your home, or the actions being taken to find you a new one. This can be extremely frustrating and you deserve to know what is happening on a regualar basis.
Your Real Estate Agents keeps pushing for price reductions without providing reason. If your home, needs a price adjustment, there will be reasons, whether it is negative feedback from other agents who have shown your home, not enough showings (normally in Edmonton, you should be getting a few showings every week with the exception of multi-million dollar homes), a surplus of recent inventory in your neighborhood, recent economic factors, etc. This information should have been discussed prior to you signing the agreement during the Comparative Market Analysis (CMA) stage.
Questions to Ask a Buyers Real Estate Agent
What type of properties do you mostly sell? Purchasing a single-family detached house is different than buying a condominium, new builds or luxury properties. It is important that the Edmonton Real Estate Agent you choose has in-depth knowledge of the type of property you are planning on purchasing.
What is your negotiation style and experience in multiple offer situations? Even in a buyers market, you may be in a multiple offer situation and great negotiating agents have personalized techniques to winning bidding wars. Some agents can be too aggressive and will lose due to their unlikeability, other agents can be too passive. Choose a real estate agent who is creative and on your side.
How many homes did you sell last year? This is a very important question. The average real estate agent in Edmonton sells about 8 properties a year. Some agents will sell over 100 properties per year. If you want a REALTOR® who will spend time with you, is knowledgeable and experience, choosing a real estate agent who sells 25-50 homes a year is your best bet.
Do you have other professionals you work with on a regular basis? Again, another very important question. Agents have relationships with other real estate providers and depending on how this question is answered, it will give you an insight on how long they have been in real estate, but more importantly on how they conduct their business.
Are you full time real estate agent? All REMAX Real Estate Agents are full-time REALTORS®. This is not the case with other real estate companies. You don’t want someone doing this part-time or as a hobby. Looking at properties for fun is not the same as having fun when looking at homes. When viewing homes, great Edmonton real estate agents will point out the flaws of each home and they all have them, not commenting on how pretty the bedroom is set up.
Do you normally work in my price range? Most Edmonton real estate agents work a wide range of prices, but if they usually help home buyers purchase million dollar homes, you might not be a top priority. Similarly, if you want to purchase new build homes and they normally work older properties, the agent may not have the right connections for Edmonton home builders.
Will I be required to sign a buyers brokerage agreement? If any Edmonton Real Estate Agents answers "No", find another REALTOR®. The Canadian Real Estate of Alberta has mandated to work with all residential buyers under an agreement. There are 2 types of agreements - Exclusive & Non-Exclusive.
Do I have to work with your recommended service providers? If the agents says “yes”, it’s illegal. Find another REALTOR®. Good real estate agents in Edmonton should have solid recommendations for other service providers, but you should never feel pressured to use their recommendation. A good agent doesn’t do everything on their own. They have a team of other professionals including mortgage brokers, home inspector, contractors, Conveyancers, real estate lawyers, etc.
Can I review all documents before I sign them? A good real estate agent will take the time to explain the documents and provide you with ample time to review important documents. Never feel pressured into signing. Real Estate Contracts are a binding agreement and it is important you understand them thoroughly prior to signing
Do you use e-signature or Docusign? An e-signature is an electronic signature and gives you an indication of how internet savvy the real estate agent is. electronic signature also eliminates the need to print, fax, scan, and ship documents and are time documented. During this conversation, your agent will also mention auto-prospecting, which is a system to keep you updated the moment a new home which meets your criteria arrives on the Edmonton or surrounding area market.
How long have you been a licensed real estate agent? This question is one that cannot be missed. Experience in the real estate industry is important. The longer a real estate agent has been selling real estate, the more transactions they have likely completed.
Do you attend the inspections? Inspections are a contingency or buyers condition when purchasing a home. If any real estate agents in Edmonton or the surrounding area, tells you don't really need one, find another REALTOR®. You may think an inspection for a condominium or a brand new property is a waste of time and money, but have an inspection can save you thousands of future dollars and find unforeseen issues. New Home warranties have limitations.
How will I know how much to offer when I find a home? Listen carefully to how the real estate agent answers this. If the REALTOR® pulls title and does a buyer's Comparative Market Analysis or CMA, congratulations, you have found yourself a great Buyers Real Estate Agent.
Should I get title insurance in place of a real property report?
If possible, it is still best to have a current Real Property Report with compliance when buying or selling a home to ensure all property buildings are within the municipality guidelines. If an RPR is not an option, title insurance is a good substitute.
Title insurance without a Real Property Report and compliance is acceptable by most major mortgage lenders and will often provide coverage for the lender for known defects. Unlike other insurance products, there is only one premium paid at the time of closing which provides coverage to the owner throughout their ownership of the property. It also offers a wide range of protection for issues that are not covered by an RPR and compliance.
Title Insurance Benefits include
- Intervening registrations – Anything registered on title between the time the lawyer submits to the Land Titles Office and the time of actual registration.
- Unknown Liens, encumbrances, tax arrears or defects in the title to a property.
- Unknown special assessments on condos that were implemented prior to closing.
- If an RPR or compliance is not obtained, it covers any defects that would have been revealed by an accurate up-to-date RPR and compliance.
- Forced removal of an existing structure with the exception of a boundary wall or fence where there is only limited coverage
- Forced compliance with work orders or deficiencies on an existing building permit.
- Loss of priority due to matters such as construction liens, agreements on title, and other mortgages.
- Another party claims an interest in the property.
- Protection against title defects or encumbrances that were unknown or undiscovered at the time of closing.
- Protection against identity theft, mortgage fraud, and fraud against the title.
- Cost savings. Typically, the cost for title insurance is far less than the cost of an RPR and compliance and is available on short notice
Drawbacks of Title Insurance
- It is an insurance product. This means when an issue arises, it may not be covered by the policy and if there is coverage the insurer can decide the method used to solve the issue which may not be the preferred choice of the insured party.
- There is a lack of disclosure and certainty, especially for the buyer, at the time of closing. If an issue is discovered later, it is more difficult to pursue the seller for a fix after closing.
- There is no coverage for known defects, except for some coverage for the lender only.
- There must be some form of enforcement or government action to trigger coverage in most cases. For example, the previous owner did renovations that do not meet the requirements of the building permit or development permit. The title insurance will only pay for the cost to fix these deficiencies if there is some form of enforcement and not simply due to the deficiencies.
- It does not guarantee that all structures will remain ‘as is’. For example, if the municipality mandates the alteration or destruction of a certain structure, the title insurance company may pay for the cost of appealing that decision however they cannot guarantee a favourable result.
- The coverage of Title Insurance is for the buyer only (not the seller).
- If a buyer or their lawyer purchases a lender only policy that is sufficient to close the deal however the buyer still has no title insurance protection.
- There is no specific protection or coverage for the seller. If a claim is made and the title insurance company determines it is the seller who created the deficiency, the title insurance company can pursue the seller for recovery of the costs they have paid.
- In most instances, title insurance only defers the need to deal with a particular issue. It does not solve it. The issues will still be there when the property is resold.
- Title insurance cannot be passed onto a new owner. Every new owner must purchase their own policy.
What Happens if your Real Property Report does not Comply?
If you are selling a home and have been told that there is no compliance or you have a non-confirming property, don't panic if you have not yet accepted an offer to purchase. Your Edmonton real estate agent can walk you through on how to write or ammend the purchase agreement to ensure you will not be penalized. However, if you have sold your home and are just finding out, you have no compliance or non-confirmation, talk to your lawyer.
Residential AREA real estate purchase agreements contain a clause which clearly outlines the factors of the real property report.
"the current use of the Land and Buildings complies with the existing municipal land use... buildings and other improvements on the Land are not placed partly or wholly on any easement ... do not encroach on neighbouring lands ... directly on the real property report ... location of Buildings and other improvements on the Land complies with all relevant municipal bylaws, regulations or relaxations ... prior to the Completion Day, or the Buildings and other improvements on the Land are “non-conforming buildings” as that term is defined in the Municipal Government Act (Alberta) ...current use of the Land and Buildings and the location of the Buildings and other improvements on the Land comply with any restrictive covenant..."
Drawbacks of Non-Compliance or Non-Confirmation:
Knowing in advance that there may be an issue with compliance or non confirmation on your real property report will save time, money and stres, by dealing with the issues in advance. Depending on the nature of the defeciency
- A request to the municipality for a certificate may lead to a requirement for substantial alterations, relocation or destruction of certain structures.
- The buyer may choose not to go ahead with the purchase until defeciencies are resolved. 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.
- Knowing in advanced provides certainty for both buyer and seller at the time of closing regarding compliance with development issues and provides the opportunity for buyer to have the seller remedy any deficiencies in this regard prior to or in conjunction with the closing.
- It can be used to address the validity of permits which may or may not have been pulled to add, replace or alter a deck, garden shed, gazebo or green house.
Do I Really Need a Real Property Report?
Traditionally a Real Property Report, also referred to as an RPR and compliance letter or non-conformance, 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. In Alberta, requesting a seller to provide to the buyer a current real property report with compliance is a standard term in our Edmonton residential real estate agreements.
There are several 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
A Real Property Report is designed to inform the property owner on the location of buildings and other structures on the land in accordance to municipal by-laws.It does not provide any information on the interior portion of any of the structures of the property, any information on “hidden items” on the property, such as the location of septic tanks or other items below ground level. It does not deal with many of the items covered by title insurance.
What is a Real Estate Absorption Rate?
During listing appointment and the CMA process, sellers often ask "How long will it take to sell my house?" Athlough there is no majic way of knowing the answer, know what is currently happening economically and using a real estate absorption rate here in Edmonton will gives us a good indication of how long aproperty will be on the market. An absorption rate will also tell us if it is buyers market or a sellers market and is often used by real estate investors.
An absorption rate is the rate at which homes sell in a given area during a given time period. Absorption rate is calculated by dividing the number of sales in a given month by the number of available homes for sale. It is the inverse of months of supply.
For example, if there are 100 houses listed for sale in a certain area, and 10 houses sold over the last month, the absorption rate is 10/100=10%. Which means, assuming no other house listing are put on the market, it would take 10 months for buyers to purchase enough properties to absorb the real estate demand.
As a rule of thumb, an absorption rate of 20-25% or higher means that homes are selling quickly and the market favors sellers. Lower absorption rates mean that homes are not selling quickly and supply is much greater than demand, favoring buyers.
If you are thinking about selling in Edmonton or the surrounding area and would like to know the absorption rate in you community, contact us.