Real Property Reports & Title Insurance

What is a Real Property Report?

A Real Property Report (RPR) is a legal document that clearly illustrates the location of significant visible improvements relative to property boundaries.  It takes the form of a plan or illustration of the various physical features of the property, including a written statement detailing the surveyor’s opinions or concerns.  It can be relied upon by the buyer, the seller, the lender and the municipality as an accurate representation of the improvements on your property.

Who needs a Real Property Report?

Property owners, to be informed of:

  • The locations of improvements within the property boundaries.
  • Any encroachments from adjacent properties.
  • Property compliance with municipal requirements.

Property purchasers, to be informed of:

  • The boundary and improvement locations on the property.
  • Any problems relating to the property boundaries.

Property sellers (vendors), to provide:

  • Protection from potential future legal liabilities resulting from problems related to property boundaries and improvements.

Mortgage Lenders, to be informed of:

  • Conformance of improvements with municipal bylaws.
  • Problems that may have to be resolved prior to registration of the mortgage.

Realtor to:

  • Provide a visual representation of the property for sale.
  • Meet requirements of the real estate / listing / purchase contract.
  • Have information to avoid delays in completing property transactions when a Real Property Report his arranged early in the sales process.

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.

How does municipal compliance protect you?

A Real Property Report is necessary to determine compliance with municipal bylaws.  A municipality reviews and endorses the Real Property Report and indicates if the improvements meet the requirements of the local bylaws.  The property owner can then resolve any outstanding issues identified by the municipality.  Early preparation of a Real Property Report significantly speeds up the process of selling a property.

How long is a Real Property Report valid?

The Real Property Report is a “snapshot” of the property on the date of the survey.  Changes are often made to improvements on a property or adjoining properties.  These may be new or modified decks, driveways, garages or other features.  Only an updated Real Property Report can show their location relative to property boundaries.
Changes to your title will also be shown.  In some cases, it is more economical to update an existing Real Property Report.  Contact the original Alberta Land Surveyor who did the RPR to see if an update can be done.

Your Property Report will show:

  • Legal description of property and municipal address.
  • Dimensions and directions of all property boundaries.
  • Designation of adjacent properties, roads, lanes, etc.
  • Location and description of all relevant improvements situated on the property together with dimensions and distances from the property boundaries.
  • Other significant improvements.
  • Right-of-way or easements as noted on the title to the property at the date of the survey.
  • Location and dimension of any visible encroachments onto, or off of, the property.
  • A duly signed certification and opinion by an Alberta Land Surveyor.
  • Copyright.
  • Permit stamp.

How is a Real Property Report prepared?

A registered Alberta Land Surveyor is the only individual who can legally prepare a Real Property Report.  A valid Real Property Report must bare the original signature and permit stamp of the Alberta Land Surveyor.  In preparing a Real Property Report, and Alberta Land Surveyor will:
  • Search the title of the subject property.
  • Search all pertinent encumbrances registered against the title of the subject property.
  • Search all plans related to the location of boundaries of the subject property.
  • Perform a field survey to determine the dimensions of the property and location of improvements.
  • Prepare a plan (diagram) reflecting the results of the field survey and title research.

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.

A Real Property Report is only a small portion of your portion of your total property investment and may help you avoid costly problems in the future.

A Real Property Report does not include replacement of any property corner posts.  Arrangements can be made to have property boundaries visibly marked on the ground.  It is most economical to have this additional service performed at the time of the survey.  Neighbouring landowners occasionally share the cost because of the mutual benefit of the Real Property Report and marking of the boundaries.

Alberta Land Surveyors’ Association

Alberta Land Surveyors are professionals – current require a university degree followed by an articling period and a series of professional examinations.  Land Surveyors are governed by provincial law with  a mandate to protect the public’s interest in matter of real property boundaries.  Additionally, they must be registered with the Alberta Land Surveyors’ Association.  An extensive practice review program ensures surveyors maintain high professional standards.  An Alberta Land Surveyor is fully responsible for the accuracy of the information in a Real Property Report.  Land Surveyors carry professional liability insurance as added protection for the consumer.

Benefits of a Real Property Report:

  • Problems are identified and can be resolved before a sale is finalized.
  • Owners know accurate locations and dimensions of buildings, improvements, rights of-way and encroachments relative to boundaries of their property.
  • Purchasers know the physical dimensions of the property.
  • Financing usually requires verified survey information.
  • Property transactions are simplified.
  • Development and building permits require boundary information.

What is Title Insurance?

Title insurance policies protect the insured against losses arising from some title related and non-title related matters, but is not the same as a Real Property Report and is not a replacement for a Real Property Report.

Consumers often purchase insurance policies for items that hold a significant value – homes, vehicles and the like.  Title insurance is another type of insurance that provides some measure of protection for an item that has significant value associated with it, the title to the property.

Real Property Report vs Title Insurance

Title insurance and Real Property Reports (RPRs) are only related in so far as they both provide a measure of protection to buyers and sellers when buying and/or selling property, but they are not the same thing.  Title insurance works like a standard insurance policy, which protects against future discoveries about the subject property, some title-related and some non title-related.

A Real Property Report is a legal document prepared by an Alberta Land Surveyor that clearly illustrates the boundaries of a property and the location of improvements (structures), such as buildings, garages, sheds and fences, relative to property boundaries.  An RPR with a stamp of municipal compliance is critical protection for all parties in a real estate transaction as it confirms the property improvements comply with municipal regulations.

Title Insurance benefits

Title insurance can benefit the lender and/or the property owner.  The benefits include the following:

  • The policy has a duty to defend the insured’s interest in the property (e.g. fraud, forgery).
  • There may be coverage of some non-titled items (e.g. building permits).
  • It provides gap coverage between submission and registration of documents at the Land Titles office.
  • It may facilitate the transaction when a current RPR is unavailable or municipal compliance issues cannot be dealt with in a timely manner.

Title insurance can also provide “gap coverage” for buyers and borrowers to protect their interest in the transaction while facilitating the closure of the transaction.  There is often a gap of several days between the submission of the land transfer and/or the mortgage document to the Land Titles office and the registration of these interests on the title.

Typically, the lawyer cannot release mortgage funds to the seller until registration is complete and the title shows no intervening registrations.  A title insurance policy can be arranged quickly, takes effect on the date issued and assures the state of the title at date of registration of the land transfer (real estate trade) or loan document (mortgage deal).

A title insurance premium is a one-time fee and is not added to the amount of the mortgage.

The lawyer in the transaction can review title insurance options with the buyer or borrower and make arrangements for a policy.  Should buyers or borrowers have questions regarding title insurance, it is important that the real estate and mortgage broker industry professionals refer them to a lawyer.

If a buyer or borrower wishes to purchase title insurance after the transaction has closed, he or she can contact title insurance companies regarding their policies.  Although some lenders require a RPR with municipal compliance, some lenders accept a policy of title insurance from an approved title insurance company in its place.  However, if the lender requires a title insurance policy as part of the transaction, the policy is for the benefit of the lender and does not cover the borrower.  That coverage comes through an owner’s policy.

A title insurance policy is only valid for the lender or owner who is specified as the insured.  As with all insurance, there are exclusions specified.

Types of Title Insurance.

There are two types of title insurance available in Canada:

  • Policies for lenders with mortgages registered on title, including new mortgages and refinanced mortgage.
  • Policies for owners, including newly purchases property and currently owned property.

Lender policy.

A lender title insurance policy is for the sole benefit of the mortgage lender.  This type of title insurance provides protection regarding the priority, validity and enforceability of the mortgage.  The system of land registration in Alberta helps create a sense of security because it accuracy is supported by the Land Titles Assurance Fund under the Land Titles Act.  A title error on the part of any professional (lawyer, real estate professional, etc.) involved in a real estate or mortgage transaction may also have professional liability coverage, but those types of claims typically rely on a finding of fault or negligence.

Title insurance operates on a no-fault basis.  Such insurance policies provide compensation to the insured party for certain losses regardless of the fault that gave rise to the claim; payment of a claim is not dependent on finding fault.  Title insurance also protects the insured from title fraud or forgery.
Owner policy.

An owner’s title insurance policy protects the property owner.  In this case, title insurance may relate to coverage for title and non-titles issues, though any known issues or defects regarding the property’s title or non-title items must be disclosed to the insurer prior to acquiring a policy.

RPR and tile insurance differences.

Title insurance:

Not required in Alberta.  It is an insurance product that cannot fix problems, but rather provides financial protection if problems arise in the future.  It may cover internal non-compliance issues that would never been shown on a RPR (such as lack of building permits or failure to meet building code on renovations such as basement development) and may cover hidden deficiencies such as underground storage tanks.

Real Property Reports

Standard residential purchase contracts in Alberta requires the seller or the seller’s lawyer to provide an RPR to the buyer or buyer’s lawyer.  It provides information about property compliance issues upfront, allowing issues to be dealt with before closing (an RPR with a stamp of municipal compliance is critical protection for all parties in a real estate transaction).  It does not provide any sort of insurance coverage / financial protection – the goal is to avoid having problems arise via an RPR with a stamp of municipal compliance.

Land titles insurance fraud.

Alberta’s land registration system uses the Torrens System of land registration and operates pursuant to the Land Titles Act.  Under this system, the Alberta government has custody of all original titles, documents and plans and has the legal responsibility  for the validity and security of all registered land title information.  Additionally, the Alberta government guarantees the accuracy of the title through the internal application and enforcement of laws derived from a multiple statues and court decisions.

An assurance fund has been established to provide compensation to anyone who has been deprived of an interest in land as a result of the operation of the Land Titles Office.

Conclusion:

Anyone who suffers a loss due to an error on the title or even as a result of a fraudulent transaction may take steps to obtain compensation from the government through  the operation of the Assurance Fund.

For more information about that Assurance Fund, contact Service Alberta.

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