What is Title insurance?  What is an RPR? Why do I need a real property report? 

Today we dive into the topic and discuss these terms and reasons why title insurance may be offered instead of an RPR, how this can benefit a seller and what it means to a buyer.

What is a Real Property Report and why is it necessary?

If I am a buyer looking to buy a property, Ideally, I will want to see an up-to-date Real Property Report with compliance (I will answer what compliance means below) as it will help me to know what I am buying.

It is a diagram of the lot/real estate and all fixed structures on that lot, as well as showing the measurements of the house, shed, deck, and all developments on the property.  

The Real Property Report shows what is built on a lot, which can help to let me know if there are any problems with a neighbour's development like a fence, shed or driveway going onto my property.

The buyer is going to want to walk the property (or they can have someone else do this) and make sure that everything you see is on the real property report correctly.

What does a “RPR with compliance" mean?

As the RPR shows what is added to the property, with compliance means that the city has stamped it to say that it complies/is valid. It also shows what has been added to the property.  If the city finds that there is a deck, for example, that was built without permits then it will let you know and the buyer would generally expect the seller to handle this situation before the buyer buys, or the buyer may decide to buy with that knowledge but want a lower price, etc.

Marc mentions that currently it costs $140 for the city to review and stamp the RPR to then make it an RPR with compliance.

Building development code and bylaws are also looked at by the city. For example, if the shed was built too close to the neighbour's property, or the deck is too big, then the city will notify you of that as well.

What happens if there are issues with the Real Property Report?

In some cases, the whole deck or shed should be taken down. In other cases, the city might give a variance, meaning that they will accept that it is slightly off what it should be.

Problems can happen for the seller because let's say that the buyer loved the deck and now, they don't want to buy the property, or let's say there is a tight timeline, and the buyer will now not have a place to live because of the issue and the time it will take to resolve.

There are many scenarios related to this that could pause the purchasing process.

If the city is going to give a variance approved, how long does this take?

It may take a few months (or possibly shorter if you are lucky) to get it permitted with the variance allowance.

Why is an RPR important to the Seller?

It is important that the property is saleable.  When a Seller says that the property is being sold "As-Is" for example, that usually makes the buyers nervous. In return the listing price should be a good one, and often the buyers will want to submit lower offers as they see this as higher risk.

What does it cost to get a Real Property Report done?

Between $550 and $800

Can a old Real Property Report be used?

Yes. The date of the Real Property Report is not important. If nothing on it is outdated and it shows the existing developments on the property, it is still valid and can be stamped/verified with the city.

If the Real Property Report shows a utility right of way on it, is that a problem?

No, that just means that the utility (water, gas, electricity) has that right of way access and it cannot be blocked.  I assume almost all people would want that service to their home and having that right of way on the RPR is completely normal.

What is Title insurance? Why would a Seller pay for Title Insurance instead of offering the buyer a Real Property Report with compliance?

Title Insurance is insurance that the seller may offer to pay which insures the buyer in the case that the buyer has a problem with something related to what the Real Property Report would cover, surprises, and also covers for the rare case that there is Title fraud.

Reasons I have found seller's wanting to offer title insurance instead could be:

• They don't want to pay the higher cost. Title insurance usually costs a few hundred which is less than what an RPR costs.

• They don't have the time to wait for the RPR. Often it can take two to three weeks to get one completed. Sometimes it can be quicker if necessary or also could be longer. 

• The property is too far out of the city, and they cannot find a surveying company to come out.

• Another reason is because the seller knows that there is something wrong with the property and they hope that the title insurance would wash their hands of it. If they mention a related issue to their Real estate agent, it would be the Real estate agents duty to let them know that they should disclose the issue.

If the seller knows something is wrong and they offer title insurance are they then safe?

The answer is usually no, but it depends on what the issue is. The title insurance does not cover changes, for example missing permits for a shed or deck, that are known.  Like almost all insurance coverage, it only covers unknown issues.

If however the Seller explains the situation to the insurance company and they include it and cover it, then it would then be covered.  That would really be case-by-case on what the insurance would agree to cover.

Real estate agents should make sure their seller understands that it is important to disclose known related issues.  When in doubt, it is better to disclose and explain issues to the buyer before any offer is accepted or it could become a legal battle! 

What does Title Insurance cover?

Title insurance policies do not cover things like damage or fire, etc. They would cover losses that would come up for defects in the title, that would show on a Real Property Report. It would cover the cost to the owner (buyer) to make that property comply with the existing bylaws.  For example, in the case of a deck that is oversized, one option would be to request a variance from the city. They may not accept decks like that one as a rule but in the circumstance, they may allow it. Or the owner would need to correct the deck (in this case) and make it comply. If there were costs, then the title insurance would cover those costs.

Title insurance also covers the rare case of title fraud.  Like if a fraudster makes fake id and sells your home fraudulently, then the title insurance would cover the correction of the title as well. 

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