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The Real Property Report (RPR) is a document that allows purchasers to verify whether the structures of the property they are buying—such as buildings, driveways, steps, landings, and retaining walls—are located within the property boundaries. It also helps ensure that the property complies with applicable zoning regulations. Additionally, the RPR enables the purchaser to determine if there is a risk of losing any permanent improvements due to non-compliance with municipal setback requirements or encroachments on utility rights-of-way or adjoining parcels. An RPR is not contractually required for the sale of a conventional condominium.
Contractual Obligations
If no modifications have been made to the standard purchase contract, and an RPR is necessary because of the property’s nature, the RPR must demonstrate the current state of the structures on the property. Contractually, the vendor is not obligated to provide a recently prepared RPR. The requirement is that the RPR accurately depicts the current state of the property’s structures. Therefore, if the RPR showing compliance is fifteen years old and accurately reflects the state’s structures, providing this RPR satisfies the vendor’s obligations.
Benefits of an RPR
Generally, when the purchaser and the vendor are aware that there will not be an RPR with compliance on the closing date, they sometimes close the transaction with title insurance. Accordingly, the purchaser and vendor amend the contract to reflect that the purchaser will close with title insurance in lieu of an RPR.
However, maintaining the contractual requirement to obtain an RPR with compliance offers several advantages for the buyer. One of the main benefits is that it can lead to negotiations for a better price on the property. For instance, if there is an encroachment agreement allowing an improvement to remain on an adjoining property but includes a provision that the agreement can be terminated, there is significant potential to negotiate a better property price that accounts for that risk.
Another advantage of having an RPR is that if the purchaser of the property is not planning to make any improvements, they will not need to obtain a new RPR when selling to a new buyer, saving on that additional cost. The RPR could also serve as a valuable reference for future land improvements, such as constructing a garage, and provides confirmation to the purchaser that no structures on the property need to be removed or modified.
Reviewing the RPR
In our office, we take several steps to ensure that the RPR involved in a real estate transaction aligns with the vendor’s contractual obligations. For example, if we represent the purchaser, we expect to have an RPR prior to our meeting with the client. We review the document with the client to confirm its accuracy and ensure it accurately represents its intended purpose. Since we do not visit the property ourselves, we also consult the realtor representing the purchaser to verify the RPR’s accuracy.
If we represent the vendor, we also ensure that the RPR that will be provided as closing documents is consistent with the contract. We’ve found that asking a vendor whether the RPR reflects the current state of the land is often not effective. Instead, we prefer to be more specific, asking questions such as whether a deck has been built since the vendor purchased the property, or if any fences have been replaced or new structures added. We take steps to ensure that when we provide an RPR on behalf of our clients, along with a statutory declaration confirming its accuracy, our clients are attesting to true facts.
Final Thoughts
Deciding whether to purchase a property without a Real Property Report is not a decision to be taken lightly. Ultimately, the buyer must make this choice independently, but it’s important to consider all the associated risks. This includes seeking advice from a lawyer, following recommendations from a realtor, evaluating the price of the house, and exploring the possibility of obtaining title insurance.
If you have any questions about legal questions about Real Property Reports, do not hesitate to contact us. We are here to help!
