THE CERTIFICATE OF COMPLIANCE - KHEMKA LAW TIDBIT
According to clause 10.2 of the Alberta Real Estate Association Residential Purchase Contract (“the Contract”), the seller or their lawyer must provide the buyer or their lawyer, as part of the closing documents, a Real Property Report (“RPR”) showing the current improvements on the land with evidence of municipal compliance. The RPR must be inline with the representations made by the seller in clause 6.1 of the Contract.
Evidence of municipal compliance is provided via a Certificate of Compliance, which is issued by the municipality where the property is located. The Certificate is usually stamped or stapled onto the front page of the RPR. A Certificate of Compliance confirms that the land to which it applies was legally created and is in line with municipal bylaws. It is a common misconception amongst real estate professionals, lawyers and their clients that if a RPR has a Certificate of Compliance then the seller has satisfied their obligations within the Contract. This train of thought is wrong.
As the Canadian Bar Association Alberta Branch have stated, “a Certificate of Compliance on an RPR does not guarantee that there are not other building location issues that may need to be addressed.” For instance, private or municipal encroachments may still exist. Defects in the property, such as those mentioned above, are generally shown on the RPR and need to be addressed by closing day or there needs to be an agreement between both parties as to what happens if those defects aren’t remedied by the closing date (i.e. lawyer holdbacks). Remember, the buyer cannot be forced to accept defects, such as encroachments, as they are “fundamental to the warranties given by the seller in the [Contract]” and the risk is too great for the buyer.
As such, the seller, their agent or their lawyer may require to obtain encroachment agreements with the owners of the neighboring property to let the structures remain, arrange to remove the encroachments, resurvey the property and/or compensate the buyer.
If you have any questions concerning RPRs, please do not hesitate to contact Khemka Law or counsel of your choosing. We are always here to assist you and your clients. Thank you for your time and consideration.
Pranav Khemka, Barrister & Solicitor
T: (403) 457-9577 | F: (403) 457-9578 | E: email@example.com
Suite 202, 5403 Crowchild Trail NW, Calgary, AB T3B 4Z1 | T: (403) 457-9577 | F: (403) 457-9578
LEGAL: The Thursday Tidbit provides general information and does not constitute legal advice. Circumstances may vary and no lawyer-client relationship is established from the use and reliance of this information. You are strongly advised to seek any legal advice by directly contacting Khemka Law or counsel of your choosing. Khemka Law does not warrant or guarantee the quality, accuracy or completeness of any information found within this Thursday Tidbit.