Do You Need an RPR to Sell a House in Alberta?

Do You Need an RPR to Sell a House in Alberta?

Short answer: often, yes — or you need another acceptable way to deal with the issue in the purchase contract.

In Alberta, a seller is commonly expected to provide a Real Property Report, usually called an RPR, when selling a house. An RPR shows the location of buildings and visible improvements on the property in relation to property boundaries, easements and rights-of-way.

But the exact requirement depends on the purchase contract.

Sometimes the seller provides a current RPR with municipal compliance. Sometimes the parties agree to use an existing RPR, title insurance, a holdback or another negotiated solution.

The important point is simple:

Do not assume an old survey, tax assessment, listing information or title search replaces an RPR.

What Is an RPR?

A Real Property Report is a survey document prepared by an Alberta Land Surveyor.

It typically shows:

• the legal boundaries of the property;

• the location of the house;

• garages, decks, sheds and other visible improvements;

• fences and retaining walls;

• driveways and sidewalks;

• easements and utility rights-of-way;

• encroachments;

• distances from structures to property lines; and

• other visible features that may affect compliance or title.

An RPR helps confirm whether the physical property matches the legal property.

That matters because what appears to be a normal fence, deck or garage may actually cross a boundary, sit too close to a property line or encroach onto a utility right-of-way.

Why Does an RPR Matter When Selling?

An RPR can reveal issues that may affect closing.

Examples include:

• a garage built too close to the property line;

• a deck that was added after an old RPR was prepared;

• a fence encroaching onto a neighbour’s land;

• eaves extending into a utility right-of-way;

• a shed located on an easement;

• a retaining wall built partly on municipal land;

• missing municipal compliance;

• unpermitted or non-compliant improvements;

• a driveway crossing property boundaries; or

• improvements not shown on the seller’s old RPR.

These issues may not be obvious from the listing, title search or a home inspection.

The practical rule is simple:

An RPR can turn a hidden closing problem into a known issue that can be fixed or negotiated before possession day.

Is an RPR Legally Required in Every Sale?

Not necessarily in every sale by statute.

But in many Alberta residential transactions, the purchase contract requires the seller to provide an RPR, often with evidence of municipal compliance, unless the parties agree otherwise.

That means the real question is usually not:

“Does the law always require an RPR?”

The better question is:

“What does the purchase contract require this seller to provide?”

If the contract says the seller must provide an RPR and municipal compliance, then failing to provide it may create a closing issue.

What Does “Municipal Compliance” Mean?

Municipal compliance generally means the municipality has reviewed the RPR and confirmed whether the buildings and improvements shown comply with certain municipal requirements, such as placement and setbacks.

This does not necessarily mean everything about the property is approved.

For example, the City of Calgary has stated that a compliance stamp addresses building-location requirements under its Land Use Bylaw and is not the same as approval of encroachments shown on the RPR: Existing encroachments – The City of Calgary.

The practical point is this:

Municipal compliance is important, but it is not always the whole answer. Encroachments, easements, permits and title issues may still need separate review.

Can You Use an Old RPR?

Sometimes.

An older RPR may be acceptable if it still accurately shows the property as it exists today and the buyer agrees to accept it.

But an old RPR can become a problem if anything changed after it was prepared.

Examples include:

• a new deck;

• a new garage;

• a fence replacement;

• a shed addition;

• a hot tub pad;

• a pergola;

• a retaining wall;

• a basement walkout;

• an addition;

• changed concrete work;

• new eaves or overhangs;

• air conditioning equipment;

• new exterior stairs; or

• landscaping structures.

If the old RPR does not show current improvements, the buyer or lender may not accept it.

The practical rule is simple:

An old RPR is only useful if it still accurately reflects the property.

What If the RPR Shows an Encroachment?

An encroachment does not automatically kill the deal.

But it must be addressed.

An encroachment may involve:

• a fence crossing a neighbour’s property line;

• a garage or eaves extending into a utility right-of-way;

• a retaining wall on municipal land;

• a driveway crossing onto another parcel;

• a shed sitting partly on an easement; or

• another structure extending outside where it should be.

The solution depends on the type of encroachment and whose land or interest is affected.

Possible solutions may include:

• an encroachment agreement;

• municipal approval;

• a neighbour’s consent;

• removal of the encroaching structure;

• title insurance;

• a holdback;

• a price adjustment;

• an extension of closing; or

• the buyer accepting the issue in writing.

Alberta Land Titles materials describe an encroachment agreement as a document allowing an improvement on one parcel to encroach onto an adjoining parcel, and once registered, it can run with the land in a similar way to an easement: EAS 1 – Easement / Encroachment / Party Wall Agreement.

The practical point is simple:

If the RPR shows an encroachment, deal with it before closing.

What If the Seller Does Not Have an RPR?

If the seller does not have an RPR, there are several possible options.

The seller may:

• order a new RPR;

• locate an old RPR and confirm whether it remains accurate;

• update an existing RPR;

• apply for municipal compliance;

• negotiate a closing extension;

• offer title insurance if acceptable to the buyer and lender;

• negotiate a holdback;

• amend the contract; or

• sell on terms that expressly do not require the seller to provide one.

The correct option depends on the contract and the transaction.

The practical rule is simple:

If you are selling, find out early whether you have a current RPR and whether it matches the property.

Can Title Insurance Replace an RPR?

Sometimes title insurance is used as an alternative to an RPR, but it is not the same thing.

Title insurance may help manage certain title or compliance risks, depending on the policy.

But title insurance does not physically show where the structures are located. It does not replace the practical information an RPR provides about boundaries, improvements, encroachments and rights-of-way.

Whether title insurance is an acceptable substitute depends on:

• the purchase contract;

• the buyer’s position;

• the lender’s requirements;

• the nature of the property;

• the type of issue;

• the title insurance policy; and

• whether the parties agree.

The practical point is this:

Title insurance may be a solution in some transactions, but it is not automatically a substitute for an RPR.

What If the Buyer Refuses to Accept Title Insurance Instead?

The buyer may not have to accept title insurance if the contract requires the seller to provide an RPR with compliance.

If the seller promised an RPR, the buyer may insist on the contractual requirement unless the parties agree to amend the deal.

This can lead to disputes close to possession.

Possible outcomes include:

• the seller obtains the RPR;

• the seller obtains municipal compliance;

• the buyer agrees to accept title insurance;

• the parties agree to a holdback;

• closing is extended;

• the purchase price is adjusted;

• the issue is resolved by an encroachment agreement or permit; or

• the parties dispute whether the seller is in breach.

The practical rule is simple:

If the contract requires an RPR, do not assume the buyer must accept something else.

What If the RPR Is Not Ready by Closing?

If the RPR is not ready by closing, the parties need to consider what the purchase contract says and how serious the issue is.

Possible solutions may include:

• a written extension;

• a holdback from the seller’s proceeds;

• title insurance;

• a written undertaking to provide the RPR later;

• municipal compliance after closing;

• a price adjustment; or

• another negotiated amendment.

A holdback may be useful where the issue is expected to be resolved after closing.

But the holdback should be clear.

It should address:

• how much money is held back;

• who holds it;

• what must be provided;

• when it must be provided;

• what happens if the RPR reveals a problem;

• who pays to fix the problem;

• when the funds are released; and

• what happens if the parties disagree.

The practical point is this:

A vague promise to “deal with the RPR later” can create a dispute after possession.

What If the Buyer Wants to Walk Away Because of an RPR Issue?

Whether the buyer can walk away depends on the contract and the seriousness of the RPR issue.

Not every RPR problem justifies termination.

For example, a minor issue that can be resolved through a reasonable holdback, municipal approval or title insurance may not be enough to end the deal.

But a serious issue may be different.

Examples may include:

• a major encroachment;

• an improvement that must be removed;

• inability to obtain municipal compliance;

• a structure built on a utility right-of-way;

• a boundary problem affecting use of the property;

• title that cannot be delivered as required;

• seller refusal to provide a contractually required RPR; or

• a lender refusing to fund because of the issue.

Alberta courts have considered whether closing disputes are serious enough to justify refusing to complete. In Healey v. Slobogan, 2008 ABPC 5, a technical side-yard deficiency did not justify refusing to close where a reasonable holdback was offered.

The practical rule is simple:

Do not assume every RPR issue is a deal-breaker. But do not ignore serious RPR problems either.

What If the Seller Fails to Provide Required Documents?

If the purchase contract requires the seller to provide certain documents, failing to do so can affect closing.

In 1613185 Alberta Ltd v 837757 Alberta Ltd, 2015 ABQB 224, the seller could not rely on the buyer’s failure to tender funds where the seller had not provided documents required under the agreement.

That case was not simply about an RPR, but the principle is important in real estate closings:

A party who has not performed its own required closing obligations may have difficulty blaming the other side for not closing.

The practical point is this:

If the seller promised closing documents, the seller should provide them on time or negotiate a clear written solution.

What If the RPR Reveals Unpermitted Work?

An RPR may show improvements that raise permit or compliance questions.

Examples include:

• decks;

• garages;

• additions;

• sheds;

• basement walkouts;

• exterior stairs;

• retaining walls;

• fences;

• pergolas;

• hot tubs;

• secondary structures; or

• other improvements added after the home was built.

The RPR itself may not tell the full permit story.

If the RPR reveals an improvement that is not compliant or does not match municipal records, further investigation may be needed.

Potential solutions may include:

• applying for permits;

• obtaining compliance;

• removing or altering the improvement;

• negotiating title insurance;

• creating a holdback;

• adjusting the purchase price; or

• amending the agreement.

The practical rule is simple:

An RPR can reveal the problem, but resolving it may require municipal, title and contract analysis.

What If the RPR Shows a Fence or Structure on Municipal Land?

Municipal encroachments can be especially important.

A municipality may require:

• an encroachment agreement;

• a licence;

• a permit;

• removal of the structure;

• fees;

• conditions on future use; or

• refusal of approval.

The City of Calgary describes encroachments as including buildings, fences, driveways, retaining walls or other structures extending onto City lands or interests: Encroachments – The City of Calgary.

Municipal approval is not guaranteed.

The practical point is this:

If the RPR shows something on municipal land or a right-of-way, do not assume it will be approved automatically.

Why Sellers Should Deal With the RPR Early

Sellers should not wait until the week before possession to deal with the RPR.

Ordering or updating an RPR can take time.

Municipal compliance can take additional time.

Fixing an encroachment or non-compliant improvement can take even longer.

Delays can create problems with:

• closing;

• mortgage funding;

• buyer confidence;

• title insurance approval;

• possession timing;

• price renegotiation;

• holdbacks; and

• default disputes.

The practical rule is simple:

If you plan to sell, check your RPR before listing or early in the transaction.

What Should Sellers Check Before Listing?

Before listing a house, a seller should check:

• Do I have an RPR?

• Is it current?

• Does it show all improvements?

• Have I added a deck, fence, garage, shed, hot tub, pergola or retaining wall?

• Does it have municipal compliance?

• Are there any known encroachments?

• Are there structures on easements or utility rights-of-way?

• Are there old permits or compliance issues?

• Did previous owners make changes not shown on the RPR?

• Will the buyer’s lender likely require the issue to be resolved?

This can prevent last-minute closing surprises.

What Should Buyers Check?

Buyers should not treat an RPR as a formality.

Before closing, buyers should consider:

• Is the RPR current?

• Does it match the property as viewed?

• Are all structures shown?

• Is municipal compliance provided?

• Are there encroachments?

• Are improvements located on easements or rights-of-way?

• Are there fences, decks, sheds or garages that create issues?

• Does the lender accept the RPR or alternative arrangement?

• Is title insurance being offered instead?

• Is the buyer comfortable with the risk?

• Should a holdback or amendment be negotiated?

The practical point is simple:

An RPR issue is easier to solve before possession than after closing.

Common Mistakes to Avoid

There are several common mistakes sellers and buyers make with RPRs.

Do not assume an old RPR is good enough. It may not show current improvements.

Do not assume municipal compliance approves everything. Encroachments and other issues may require separate approval.

Do not wait until closing week. RPR delays can delay possession.

Do not assume title insurance always replaces an RPR. It depends on the contract, buyer and lender.

Do not ignore encroachments. A fence, eave, garage or retaining wall crossing a boundary can create real problems.

Do not rely on verbal agreements. If the parties agree to use title insurance, a holdback or later compliance, put it in writing.

Do not assume the buyer must accept a substitute. If the contract requires an RPR, the seller may need to provide it unless the contract is amended.

What This Means Practically

Three rules are worth remembering.

An RPR is often required because the contract requires it. The purchase agreement controls what the seller must provide.

A current RPR can prevent closing problems. It identifies improvements, boundaries, easements, rights-of-way and encroachments before possession.

Alternatives must be agreed to. Title insurance, holdbacks or later delivery may work in some cases, but they should be clearly documented.

Speak With an Alberta Real Estate Lawyer

If you are selling a house in Alberta and do not have a current RPR, deal with the issue early.

A proper review should consider:

• the purchase contract;

• whether an RPR is required;

• whether the existing RPR is current;

• whether municipal compliance is available;

• whether improvements have changed;

• whether there are encroachments;

• whether title insurance is acceptable;

• whether a holdback is appropriate;

• whether closing needs to be extended; and

• whether the buyer or lender may object.

This article provides general information about Real Property Reports in Alberta residential real estate transactions. The seller’s obligations depend on the purchase contract, the state of the property and the documents the parties agree to use for closing.