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Real Estate Terminology 101

Alberta Real Estate Association - An association of real estate industry members who belong to real estate boards in Alberta.

Addendum and Amendment - is a written change of a listing contract or purchase agreement agreed upon by either a buyer or a seller or both.

Amenities - In real estate, amenities are something considered to benefit the property and thereby increase the value of a property. Condominium amenities can include items such as elevators, underground parking, party rooms and swimming pools. Public amenities include banks, retail buildings, local buses and LRT stations, medical facilities, parks, schools, walking trails, golf courses and other community facilities.

Amortization - is the time period during which home buyers will have to pay back their mortgage to their lender — both the principal and interest accrued.

Appraisal — An estimate of a property’s value performed by a professional Appraiser.

As-Is - Common term used with the purchase of a foreclosed property. It is also used when chattels may not be in working order.

Asking Price — The price placed on the property for sale by the seller. This may or may not be the price the seller is willing to accept from a qualified buyer.

Assessed Value — The value of a property, set and used by each municipality for the purposes of calculating property tax.

Assessment - A certified real estate appraiser assigns a certain value to one’s property based on their statistical findings and general industry acumen.

Agent — A real estate professional registered in Alberta to facilitate the sale, lease or exchange of a property.

Assumable Mortgage - A mortgage held on a property by the seller that can be taken over by the buyer, who then accepts responsibility for making the mortgage payments. Speak with your Edmonton REALTOR® or lawyer prior to assumption of mortgages.

Attached Goods — Also known as chattels are an item which is attached to real property so as to form, in law, part of the land. Attached goods belong to the buyer and are also known as fixtures.

Breach of Contract - Where one party (buyer or seller) has not held up to the terms of the agreement such as getting cold feet about purchasing a residence after conditions have been removed. These instances can lead to the length of legal proceedings.

Broker — A person licensed by the provincial or territorial government to trade in real estate. Real estate brokers may form companies or offices which appoint sales representatives to provide services to the seller or buyer, or they may provide the same services themselves. In parts of Canada, brokers are referred to as Associates or Agents.

Built-Ins - Permanent structures or items which are physically built into the structure of a home such as an entertainment centre.

Buyer Brokerage Agreement — A written agreement between the buyer and the buyer's associate, outlining the agency relationship between the two parties and the manner in which the buyer's associate will be compensated. In Alberta, a buyer agency relationship arises automatically without a written agreement establishing the relationship.

Buy-Down - Commonly used by our DND members. It is a mortgage financing technique where the buyer obtains a lower interest rate for at least the first few years of the mortgage and is typically done for a period of about one to five years.

Buyer’s Associate — also known as Buyer’s REALTOR® or Broker — A person or firm representing the buyer. A buyer’s associate's primary allegiance is to the buyer. The buyer is the buyer associate's client.

Buyer’s Market - A surplus of homes for sale in a municipality which usually leads sellers to lower prices to compete with nearby homes making favourable conditions for home buyers.

Certificate of Compliance — A stamp issued by the municipality which states the improvements comply with the local building bylaws and requirements.

Client — The person being represented by an associate. The associate owes the client fiduciary duties including utmost care, integrity, confidentiality and loyalty.

Closing - Is the "move-in" date written on your purchase agreement or the date in which the title of your property is legally in your name.

Closing Costs — Expenses in addition to the purchase price for buying and selling a property such as legal fees and title transfer costs.

CMHC — Canada Mortgage and Housing Corporation. A Crown corporation providing information services and mortgage loan insurance.

Commission — An amount agreed to by the seller and the real estate broker/associate and stated in the listing agreement. It is payable to the brokerage on closing and shared, if applicable, among those Associates involved in the sale. It is the remuneration for services provided, normally paid at the time of closing in the province of Alberta.

Comparative Market Analysis (CMA) — The most widely used technique for REALTORS® in establishing the value of residential properties. It uses sales, competitive listings and expired listings to try to determine a probable selling price for the subject property. Used synonymously with Competitive Market Analysis.

Common Area - Homebuyers who purchase residences in multifamily complexes and condominiums often have to share common areas such as the complexes amenities. This may also include parking lots and complex green spaces.

Completion Day — The day from which all calculations of interest, tax adjustments, utility bill adjustments (if applicable), etc. are made to the credit of either the buyer or the seller. All legal and financial obligations are met on that day and the title to the property is transferred from the seller to the buyer. Completion day is usually (but not always) the same as the possession date.

Condition Precedent — A statement of a condition to be fulfilled before the contract will become firm and binding; must include a specific deadline for removal. May also be called a “subject to” clause.

Condominium Ownership — Shared ownership in a strata-titled property. Owners have a title (ownership) to individual units and a proportionate share in the common property.

Contingencies - Sometimes there are unforeseen property issues, like structural damages to a listing only unearthed after an inspection or failure of home financing to come through. In these cases, contingencies are placed into home purchase agreements so buyers have the right to back out of a deal or demand certain items be amended, removed, or added to a contract.

Conventional Mortgage — A mortgage loan which is 75 per cent or less of the loan-to-value ratio; and does not require insurance by CMHC or other private insurers.

Conveyance — The term used to describe the process of transferring the seller's title to the buyer and indicates all the necessary steps to complete the transfer. A conveyance lawyer is a lawyer responsible for the conveyance process.

Counter Offer — An offer made by the seller back to the buyer altering one or several terms and/or conditions of the offer as originally written. It is the rejection and change of the original offer. It allows the original party to accept, reject or add an additional counter. This is the art of negotiation is something every top-producing Edmonton real estate agent lives for.

CREA — The Canadian Real Estate Association. A national association representing the real estate industry on federal public policy matters, providing member services and education. CREA promotes adherence to a strict REALTOR® Code. CREA Code of Ethics — Rules of behaviour or conduct which provide a standard of fair, moral practice and a guide by which a REALTOR®'s behaviour or conduct is evaluated. Most Edmonton REALTORS® belong to CREA.

Customer — A person who receives information or assistance from a real estate broker or associate, but is not represented by that individual. A customer is NOT a REALTORS® client.

Debt Service Ratio — The percentage of a borrower's income that can be used for housing costs.

Down Payment — The difference between a property's purchase price and the amount financed. Most Edmonton buyers fall in the 5-20% range. The general rule is the more a buyer is willing to put down on a home, the lower their mortgage interest rate will be.

Disclosure - It’s considered highly unethical for a home seller and their representation to not disclose any defects or problems with their property when they list it. Disclosing all issues with a home for sale is an absolute must for sellers. Failing to do so could lead to not only withdrawn offers from or legal issues with potential buyers, but also a damaged reputation on the part of the agent who works with that seller.

Dual Agency — A real estate brokerage which acts as an associate for both the seller and the buyer in the same transaction. Both buyer and seller are the brokerage's clients.

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Real Estate Terminology 101 (continued)


Easement — A legal right to use or cross (right-of-way) another person's land for limited purposes. A common example is a utility company's right to run wires or lay pipe across a property.

Encroachment — An intrusion onto an adjoining property. Common examples are a neighbour's fence, storage shed, or overhanging roof line which partially (or even fully) intrudes onto your property.

Encroachment Agreement — An agreement which allows the encroachment to remain. The owner of the development which encroaches onto the adjoining property is granted the right to enter onto that property to maintain or repair the construction.

Encumbrance — A restriction which is either a monetary claim against the land (such as a lien, mortgage or lease) or a non-monetary one (such as an easement).

Estoppel Certificate — A written statement of a condominium unit's current financial and legal status.

Equity — The difference between the price for which a property can be sold and the mortgage(s) on the property. Equity is the owner's stake in the property.

Extension - Homebuyers who need more time to evaluate whether or not to move forward with a purchase agreement or simply need to get their finances in order often request an extension of conditions. It should be noted, sellers do not have to grant an extension of buyers.

Fee Simple Estate — Ownership where the owner owns the land now and for all time in the future and the owner's rights are subject only to restrictions by the government.

Fair Market Value - is the dollar figure put forth by the appraiser and assessor is averaged out with other residential figures from the local market. Comparable sale prices are factored in, thus giving sellers a relatively fair market value for their home.

Fixed-Rate Mortgage - is the most popular type of mortgage given to borrowers today making the amount of your mortgage payment the same each month of the amortization period.

FSBO - For Sale By Owner

Foreclosure - Bank owned property due to a seller defaulting on mortgage or tax payments.

Fiduciary Duties — The duties require for all licenced Edmonton REALTORS® of loyalty, disclosure, confidentiality, obedience, reasonable care and diligence, and full accounting that are required by the law of any associate relative to his or her principal.

First Mortgage — The first security registered on a property. Additional mortgages secured against the property are "secondary" to the first mortgage.

Foreclosure — A legal process by which the lender takes possession and ownership of a property when the borrower doesn't meet the mortgage obligations.

Gross Debt Service (ADS) Ratio — Gross debt service divided by household income. A rule of thumb is that ADS should not exceed 30%. It is also referred to as PIT (Principal, Interest and Taxes) over income. Sometimes energy costs are added to the formula, producing BITE, which moves the rule of thumb ADS to 32%.

High-Ratio Mortgage — A mortgage that exceeds 75 per cent of the loan-to-value ratio; must be insured by either the Canada Mortgage and Housing Corporation to protect the lender against default by the borrower who has less equity invested in the property.

Home Inspection - An appraiser or certified property inspector who provides buyers with a summary of the overall condition of the chosen home. This cost is usually covered by the buyer and a condition or contingency on an offer to purchase.

Home Warranty - an Insurance which covers homeowners when unforeseen issues arise with their homes. In the province of Alberta, it is now a standard practice for builders to provide a five-year new home warranty.

Homeowners Association Fee (HOA) - Is becoming a more common expense for Edmonton homeowners. It is a small annual fee to maintain a community. An HOA fee may cover things such as community fences, water features or playgrounds.

Gross Debt Service (ADS) Ratio — Gross debt service divided by household income. A rule of thumb is that ADS should not exceed 30%. It is also referred to as PIT (Principal, Interest and Taxes) over income. Sometimes energy costs are added to the formula, producing BITE, which moves the rule of thumb ADS to 32%.

High-Ratio Mortgage — A mortgage that exceeds 75 per cent of the loan-to-value ratio; must be insured by either the Canada Mortgage and Housing Corporation to protect the lender against default by the borrower who has less equity invested in the property.

Home Inspection - An appraiser or certified property inspector who provides buyers with a summary of the overall condition of the chosen home. This cost is usually covered by the buyer and a condition or contingency on an offer to purchase.

Home Warranty - an Insurance which covers homeowners when unforeseen issues arise with their homes. In the province of Alberta, it is now a standard practice for builders to provide a five-year new home warranty.

Homeowners Association Fee (HOA) - Is becoming a more common expense for Edmonton homeowners. It is a small annual fee to maintain a community. An HOA fee may cover things such as community fences, water features or playgrounds.

IDX - Internet Data Exchange - a multiple listing service syndications on Edmonton REALTOR® websites which provide real estate internet data and can showcase listings.

Joint Tenancy — A form of ownership in which two or more individuals (often spouses) have an equal share in the ownership of a property. In the event of one owner's death, his or her share is automatically transferred to the surviving owner; and does not become part of the deceased's estate.

Latent Defects - a defect in a property such as mould hiding beneath the surface of a floor or wall which can often go unfound by inspectors.

Lien — Any legal claim against a property, filed to ensure payment of a debt. It is a debt placed against a sellers residence, usually when a party says they are owed a debt by the owner of a property. At closing, the seller's lawyer (assuming there is enough property equity) will pay out the lien.

List Price - The asking price of a property. Note this may or may not be a fair market value price or the price a seller would be willing to accept.

Listing REALTOR® — The REALTOR® who signs a contract on behalf of the brokerage with an owner to sell the property.

Listing Contract — The legal agreement between the listing brokerage and the seller, setting out the services to be rendered, describing the property for sale and stating the terms of payment. A commission is generally payable to the brokerage upon completion of a sale.

Listing Presentation - a presentation customized by an agent who provides information on how they get the job done. Every Edmonton REALTOR® listing presentations is unique offering different real estate services. Note - Not all Edmonton REALTOR® provide the same services.

Lockbox - A small electronic box used to store keys to a home for easy access for licenced REALTORS® to show clients the listing to prospective buyers. If a REALTOR® is not licenced by our Edmonton Real Estate Board, they may not be able to access the lockbox.

Mortgage — A contract between a borrower and a lender. The borrower pledges a property as security to guarantee repayment of the mortgage debt. Lenders consider both the property (security) and the financial worth of the borrower (covenant) in deciding on a mortgage loan. See below for more on mortgage terminology.

Mortgage Life Insurance — Insurance that pays off the mortgage debt should the insured borrower die.

Mortgagee — The person or financial institution lending the money, secured by a mortgage.

Mortgagor — The property owner borrowing the money, secured by a mortgage.

Mortgage Broker — A person or company having contacts with financial institutions or individuals wishing to invest in mortgages. The mortgagor pays the broker a fee for arranging the mortgage. Appraisal and legal services may or may not be included in the fee.

Multiple Listing Service® System — An MLS® System is a cooperative selling system operated and promoted by a Board or Association in association with the MLS® Marks. An MLS® System includes an inventory of listings of participating REALTORS® and ensures a certain level of accuracy of information, professionalism and cooperation amongst REALTORS® to effect the purchase and sale of real estate.

Mutual Acceptance - This doesn’t mean the deal is done. Mutual acceptance takes place when both a buyer and seller agree to the terms and conditions associated with a home sale. Once the paperwork is signed and initialled on all changes, the property is considered "pending." Sellers are still allowed to accept offers, but only in a backup place. In the province of Alberta, pending offers are in the first place unless the buyer is unable to remove conditions by the deadline.

Organized Real Estate — Refers to the various bodies or groups (CREA, AREA, local boards) who work together to bring about structure, standards and accepted practices in real estate. Most Edmonton REALTORS® belong to all three real estate boards.

Open Mortgage — A mortgage that can be prepaid or renegotiated at any time and in any amount, without penalty.

Owner Financing - This type of financing is rarer than having a mortgage. It typically occurs when a seller is fiscally well-off enough to provide a loan to a buyer.

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Real Estate Terminology 101 (continued)

Pre-Approved Mortgage — Tentatively approved by a financial institution for a specified amount, interest rate and monthly payment.

PIT - Principal, Interest and Taxes.

Pocket Listing - Is a listing which your Edmonton REALTOR® may have which for various reasons is not listed on the MLS.

Principal — The mortgage amount initially borrowed or the portion still owing on the mortgage. Interest is calculated on the principal amount.

Property Taxes — The value of the property as determined by local municipalities affects this levy. Local government determines the rate of taxation. Property taxes are paid on an annual basis.

Purchase Contract — The document through which the prospective buyer sets out the price and conditions under which he or she will buy the property.

Refinancing — The process of obtaining a new mortgage, usually at a lower interest rate, to replace the existing mortgage.

Real Estate Board — A non-profit organization representing local real estate brokers and Associates which provides services to its members and maintains and operates the local MLS® System. It offers orientation and other continuing education courses to its members and represents local real estate matters at the municipal level. Our Edmonton REALTOR® board is called the Edmonton Association of REALTORS®.

Real Property Report — The legal outline of the property and location of all buildings and improvements on the land (formerly called the Surveyor's certificate).

REALTOR® — A trademark controlled by the Canadian Real Estate Association that identifies real estate professionals who are members of CREA. REALTOR® refers to the standard of brokerage services provided by members of CREA. REALTOR® is synonymous with professionalism. And professionalism means at least three things -service, competence and ethics. All three are essential ingredients in the REALTOR® recipe.

REALTOR.ca — Carries property advertisements and consumer-related information supplied by individual real estate boards and associations across Canada.

REALTOR® Code of Ethics - The promise to work in the best interests of real estate clients and abide by all rules and regulations set by local, provincial and federal real estate associations.

REALTORS® Association of Edmonton — REALTORS® Association of Edmonton is a professional association of over 3,100 Brokers and Associates in the greater Edmonton area. The Association enforces a Code of Ethics, Standards of Business Practice and disciplinary action, when necessary, for its members. The Association provides professional education to its members, administers the Multiple Listing Service® and advertises property listings on the Internet atREALTOR.ca, as well as in the Real Estate Weekly for the benefit of REALTORS® and their clients.

RECA - Real estate council of Alberta. A provincial real estate association representing the real estate industry on provincial matters, providing members with legal real estate documents for both buyers and sellers. Most Edmonton REALTORS® belong to CREA.

Rights of Way — Are indicated on title at the Land Title Office; often for use of utilities or city or municipality in order to make repairs to pipes, etc. No permanent structure may be built on a right of way.

Second Mortgage — A second financing arrangement, in addition to the first mortgage, also secured by the property. Second mortgages are usually issued at a higher interest rate and for a shorter term than the first mortgage.

Seller’s Market - occurs when there are fewer homes on the market the demand is far higher than the supply. This increases house prices and sometimes very quickly like during Edmonton real estate boom in 2006 - 2007.

Seller’s REALTOR®— The seller's REALTOR® represents the seller as a listing associate under the listing contract. His or her primary allegiance is to the seller. The seller's associate does not represent the buyer.

Single Agency — The practice of representing either the buyer or the seller, but not both in the same transaction.

Statements of Adjustments — Closing statements in a real estate transaction which set out the sources of funds which make up the purchase price, adjustments to and from the purchase price, the final amount required from the purchase and the amount due to the seller. Alberta real estate lawyers will prepare a statement for the seller and the buyer.

Surveyor - A person who is qualified for analyzing entire lots where properties reside and provide their findings in the form of maps and reports to homeowners. Surveyors can provide Edmonton homes owners with a current real property report.

Tenancy in Common — The owners each own a part of common land. If one owner dies, the interest goes to his or her heirs rather than the other owners.

Title — The legal evidence of ownership in a property.

Title Insurance - An insurance which covers homeowners in an unforeseen event such as another party lays claim to a residence, issues pertaining to forgery or fraud.

Title Search — A detailed examination of the ownership documents to identify the owner and any liens or other encumbrances on the property.

Total Debt Service Ratio — the maximum percentage of a borrower's income that a lender will consider for all debt repayment including other loans and credit cards and mortgages.

Torrens System — Alberta's land registry system.

Transaction Brokerage Disclosure — The information which a dual associate must disclose and explain to both buyer or a seller when he or she is acting as a dual associate.

Turn-Key - A phrase used by REALTORS® for pristine properties.

Unattached Goods — Moveable personal property such as appliances. Normally in the province of Alberta, unattached chattels are left in the home.

Underwriter - An underwriter reviews all paperwork relating to your mortgage pre-approval to make sure everything is in order and that borrowers are truly qualified to receive such a loan. Should the underwriter discover something off with a loan (e.g. lower buyer credit score than the one listed), they alert the originator, who will then have to rework the mortgage terms.

Walkthrough - a pre-scheduled date to allow buyers to view a property prior to closing to ensure all terms have been satisfied.

Zoning — Land Use Bylaw specifies in great detail every aspect of how property within a particular area of the municipality may be used.

Zero-Lot Line - Many existing homes today are built exactly on top of property lines. These often exist in urban areas, where buildings are constructed quite close to one another and use all of their allotted land space to build.

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Can a Real Estate Deal Fall Through Due to COVID-19?

In the wake of COVID-19, there has been a lot of uncertainty this fragility has extended to the Edmonton housing market as many were either mid-deal, planning on buying or selling, or had a project underway. As real estate professionals, we have received a lot of questions regarding the pandemic and the housing market, frequently around real estate agreements and how COVID-19 has impacted such agreements. In this blog, we will answer our most frequently asked questions from both clients and REALTORS®, about how the pandemic has affected real estate agreements:

1. Can a buyer cancel an agreement due to COVID-19?

The simple answer is no. If a buyer cannot obtain a mortgage, goes into quarantine or the value of the property decreases, these are not acceptable excuses to cancel a real estate agreement. Either terms of an extension are agreed to, or the buyer can be sued for any deficiency the seller suffers on a resale.

2. Can a seller refuse a pre-closing visit due to being afraid of COVID-19?

If the visit is provided for in the agreement, a safe compromise should be worked out, with perhaps only one buyer visiting the home. Such a buyer would be expected to wear a mask and gloves, and only enter the home for a short time (maximum 20 minutes). During such a visit, a buyer should also be required not to touch anything in the home to ensure maximum safety. Another option is for the buyer and seller to agree to a Zoom meeting where the seller goes around the entire house showing the buyer all areas of concern. A final option we have seen is when the seller arranges to vacate the property early on the closing date and have the buyer enter the property for a final inspection. This option provides both parties with a fair final inspection of the home while also leaving enough time to close.

3. Can the Government Land Registry System close down?

While this is theoretically possible, we have been assured by the Director of Titles that this will not occur since the system is being operated by staff who are working remotely. In the unlikely event that this did occur, most real estate closings could still proceed as long as the buyer had title insurance which provides gap coverage, meaning that the agreements can close as scheduled, money can be paid to sellers, keys released to buyer and registrations occurring once the system is up and running again. Gap coverage means that in the unlikely event, a lien or judgment arises in the intervening period, which could affect the title. The buyer’s title insurance policy will remove it.

4. Can a buyer or seller complete a real estate closing without visiting a lawyer in person?

The answer is yes, but not all law firms offer this service. Technically speaking there is no requirement to meet any buyer or seller in person. All document signings can be done by video conference. If a law firm is registered as a bill payee at major banks, buyers can transfer the closing down payment directly to its trust account online, so that they do not have to line up at a bank branch with a mask for an extended period of time to obtain a bank draft. For sellers, this would mean signing all documents by video conference and automatically transferring closing funds by Electronic Funds Transfer directly to the seller’s bank account after closing, the same way real estate commissions are paid after closing.

5. Do you need special clauses to protect buyers and sellers during the pandemic?

Here are three practical clauses to include in any agreement during the pandemic:

  1. The Buyer shall pay the balance of the purchase price, subject to the usual adjustments by wire transfer.
  2. The parties acknowledge and agree that all closing documentation can be signed electronically and forwarded by email or fax in accordance with the Electronic Commerce Act
  3. The parties agree that the keys to the property shall be left in a lockbox at the property and the code to the same is to be provided to the Buyer’s lawyer in escrow pending closing of this transaction.

Otherwise, no further clauses should be added, as they do more harm than good, especially when they give buyers or sellers the right to terminate an agreement. As stated earlier, even in the remote situation that the government registration system goes down, real estate agreements can still close if there is gap coverage in place through the title insurance. Legal advice should always be obtained before any additional clauses are introduced into any real estate agreement of purchase and sale.

This article was supplied by RealEstateLaywers.ca LLP. It is being posted on the blog for information purposes only and does not constitute legal advice nor an endorsement of the author or his firm. Consumers are advised to reach out to and engage their own legal counsel regarding their specific situation.

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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 expectations 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.  

How to fire a Realtor
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 regular basis.

Your Real Estate Agent keeps pushing for price reductions without providing the reason. If your home, needs a price adjustment, there will be a reason, 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.

If you are still interested in selling your home and would like an experienced marketing real estate team to work with you in your best interest, contact us.

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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.

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Title insurance without a Real Property Report and compliance is acceptable to 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.

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Title Insurance Benefits include

  • Intervening registrations – Anything registered on the 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.
  • The 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 a 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 in the current state. 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. /li>
  • 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.


For more information on real property reports and the effects on the resale of your residential dwellings and a free Edmonton Home Evaluation, contact one of Remax Elite REALTORS®

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Does Your Bank Require an Appraisal?

Appraisals are an important part of buying and selling homes in Edmonton. Real estate appraisals establish a property's sold market value price. Banks and financial Institutions require property appraisals when buyers require a mortgage on their new homes as security and provide financial institutions with a cost-effective assurance of the properties value for lending purposes. Appraisals are detailed reports compiled by licensed real estate appraisers.

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Don't confuse a comparative market analysis, or CMA, with a real estate appraisal. A CMA is a sales report based on data entered into the multiple listing service, or MLS. Real estate agents use CMAs to help their clients determine realistic asking and offering prices.

An appraisal is also not the same thing as a property inspection. Home inspectors test appliances and outlets, check the plumbing and electrical, confirm heating and cooling system are in working order, use inspection tools to look for any moisture issues, missing insulation, etc.. Such information is helpful for the buyer to know before moving in.

If your real estate appraisal comes in low, the bank may not lend you the money you need to satisfy your finance condition. You may need to come up with the difference in cash or re-negotiate the sale price of the property.

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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.


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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 neighbour’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.


READ MORE ON THE DIFFERENCES BETWEEN REAL PROPERTY REPORTS AND TITLE INSURANCE

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Why You Need a Property Title Search

When a real estate agent in Edmonton is working for either a buyer or a seller, a property title search needs to be pulled prior to listing a home or writing an offer to purchase to ensure the saleability of the property.


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Basic information on a property title will include:

  • The current owners' name: In the event of an estate sale, probate may or may not have been completed and your real estate agent will ensure the person selling the property does have power of attorney. In the event, there is only one person on the title in a marriage, a dower consent will also be needed to complete the sale.
  • The Legal description: The municipal or mailing address is different from the legal description and includes a block, lot and Plan number.
  • The amount of the last mortgage, any second or third mortgages or the original purchase amount at the time of purchase or there may be a nominal fee.

Other things which can be revealed on a property title search may include:

  • Outstanding or owing property taxes, special assessments, delinquent condominium fees which have not been paid by the seller.
  • Outstanding creditors including other financial institutions and businesses for things like unpaid vehicle loans, furniture stores, construction loans, personal loans, etc
  • A lis pendens, which is normally added by a lawyer during divorce procedures and "freezes" the transfer of a property until all parties are satisfied.
  • Easements and Liens from a third party, such as the municipality, utility company or Environmental liens, who may have rights to use part of your property.
  • Covenants which are restrictions on the land that can limit what can be built on it, where it can be built and from what materials it may be built. Breaching a covenant can have serious consequences so it is necessary to be aware of any covenants on your property.

If you are not represented by an Edmonton Real Estate Agent, with the legal description and a small fee, the public can pull the title of a property plus details on any registered documents attached to it. Also note, between the time a condition has been removed from an offer to purchase to the time a buyer signs with their lawyer, there may be a change on the land title certificate.


Learn more about real estate contracts in Alberta

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Understanding Buyers Brokerage Agreements

Buyer Brokerage Agreements have been around for several years, and only recently has been mandated for real estate agents to have buyers under the agreement when working in a "client status". This legal change created security for both consumers and real estates in Edmonton and throughout Alberta. This form states the responsibilities of both the buyer and their real estate agent including:


  • The mandated Fiduciary Duties, to protect interests of the buyer
  • The buyer cannot hire more than one broker or real estate agent to represent them
  • The term of the agreement. Depending on the real estate market and how long the real estate agent chooses to work with a buyer, this agreement is normally 30 Days to 1 year and allows enough time for the buyer to purchase a home. If the buyer has not purchased a home during the time frame, they may extend the agreement or sign with another agent.
  • The retainer fee (normally $1000 - $2500) which is held in trust by the real estate agent/broker and forms part of the buyers down payment.
  • Remuneration is stated in the agreement and can not be changed without written consent from all parties. This protects the agents' commissions and allows the buyer to know how much the REALTOR® receives for their services. (usually paid for by the sellers real estate agent)
  • While under the agreement, If the buyer elects to purchase a property without the help of their real estate agent, they will owe the agency the commission set out as per their Buyers Brokerage Agreement.
  • This agreement also lays out the obligations and duties of the real estate agent ensuring the agency is working in the buyers best interest. Some of these obligations may include
  • Showing you all properties you may be interested in as soon as possible
  • The duration of the agreement
  • Advertising for properties which meet your search criteria
  • Pulling titles to ensure closing capacity
  • Setting you up on Auto-prospecting.
  • Fiduciary Duties of the real estate agent
  • Explaining and helping to prepare the offers to purchase
  • Negotiate favourable terms for the buyer
  • Provide a Buyers CMA to ensure you are not overpaying
  • Inform you on all aspects of your offers including any counters
  • Assist you with a chose of mortgage brokers, inspectors, lawyers, etc
  • Any other relevant services you may require

For more information on working under a Buyers Brokerage Agreement, feel free to contact us.

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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-conforming 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 amend 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 neighboring 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..."

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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 stress, by dealing with the issues in advance. Depending on the nature of the deficiency

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 deficiencies 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 among 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 a 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 greenhouse.

Any concerns or questions regarding issues with your real property report, please contact your real estate lawyer. Note* The town of Morinville no longer requires compliance.

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Do you really need a property inspection when purchasing a home in Edmonton?

A real estate property home inspection is an objective visual examination of the physical structure and systems of a house, from the roof to the foundation. It is for the sole benefit of the purchaser and is usually subcontracted to a certified licensed residential real estate inspector, paid for by the buyer and can take one to four hours depending on the size and condition of the property. At the end of your inspection, a standard home inspector’s report will be supplied covering the condition of the home.

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A home inspection can identify the need for major repairs or builder oversights which can lead to unpleasant surprises and unexpected difficulties in the future. Buying a home can be the largest single investment you will make and spending a few hundred dollars for peace of mind is money well spent.

Home inspection components covered include:

  • heating system including furnace and hot water tank
  • central air conditioning system
  • carbon monoxide and fire alarm detectors
  • interior plumbing using both visual and water residue tools
  • mold issues and water damage
  • electrical systems
  • the roof & attic
  • visible insulation of walls, ceilings, floors, windows and doors using a thermal ray tool
  • foundation & basement
  • other structural components which may need major repair or replacement.

Depending on your chosen property inspector, there may be some things that will not be inspected such as things which can not be seen visually and appliances. You may want to check that these chattels are in working order.

Foreclosures:

If a home inspection is not allowed on a bank foreclosure, it is still a good idea to have one done, prior to putting in an offer.

New Homes:

In Alberta, builders must supply a new home warranty at closing, however, new homes should ALWAYS have a home inspection done. Building a house takes time and there are always things that get missed. It is easier to address these concerns before you remove your inspection condition.

What if the report reveals problems? No house is perfect. If the inspector identifies problems, it doesn’t mean you should or shouldn’t buy the house. Talk it over with your real estate agent. There are a few options to address any concerns you have.

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Real Estate Agent Fiduciary Duties

Real Estate Agents in Edmonton and the province of Alberta who is in an agency capacity for buyer or seller clients have duties mandated by the legal system called fiduciary duties. The position of the REALTOR® is a fiduciary capacity, acting in the best interests of the client.


Alberta Real Estate Contracts


  • Obedience:  Your real estate agent must obey your instructions as long as it is legal and in accordance with your brokerage agreement.
  • Loyalty:  Your real estate agent must be loyal and keep your best interests ahead of those of any other party, including themselves.
  • Disclosure:  In the province of Alberta, the law requires real estate agents, whether in an "agency" capacity or not, to disclose material facts to their client. Material facts are those that, if known by the buyer or seller, might have caused them to change their purchase or sale actions. In a signed agency agreement, your real estate agent must disclose more than the material facts. They must disclose all known or suspected information regarding the purchase of the property.
  • Confidentiality: A real estate agents fiduciary duty of confidentiality means that nothing learned about you can be disclosed including your business, financial, personal affairs or motivations. This confidentiality fiduciary duty must be maintained for eternity.
  • Accounting: Your real estate agent is accountable for all documents and funds in the transaction. Accurate reporting of the whereabouts of all monies pertaining to the transaction and the ultimate disposition. All documents are to be kept for at least six years.
  • Reasonable Care: The words "reasonable care" are only finally fully defined in many cases by a judge or jury when it's too late to change your actions. Most Edmonton Real Estate Agents, as a rule of thumb, go by the ethics code "What we know, you know" when acting in an agency relationship.
Whether you work with a real estate agent  in Edmonton under a "customer status" or a "client status", before signing any other paperwork, REALTORS® in Edmonton and the surrounding areas have a regulatory requirement to present and discuss our Consumer Relationship Guide with you which includes the real estate agency relationship you have chosen to work under. A copy of this form can be found at the Real Estate Council of Alberta. 
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