Real Estate Lawyers Don’t Hate Everything…Just THIS!

real estate anger


By Darren Richards
If a bare land condo is in many ways similar to a regular non-condo lot (owner owns everything within the unit/lot lines including the building, decks, even some landscaping), what will a buyer and his lender want to obtain?

I suppose most people would want a lawn mower. Most of you in Edmonton were probably going to say snow blower. But neither is the answer I was looking for. Most bare land condos are maintained (grass mowed, snow shoveled) in same way a regular condo is (read last month’s article again).

The correct answer is a proper Real Property Report (or Survey Certificate) with evidence of municipal compliance.

This is the case for at least three reasons: 

  1. The contract likely requires it. Hidden away in the deep dark corners of the typical Real Estate Purchase Contract is a clause that requires the Seller to provide the Buyer with a Real Property Report (or Survey Certificate) showing the current state of the property with evidence of municipal compliance. Most of you already knew that. But hidden in an even darker corner is this gem: “This obligation will not apply to condominium units that do not create a lot, nor to any transaction where there are no structures on the land.” What does that mean? Well, there are only two exceptions: the sale of raw land (nothing on it so nothing to show on a survey) or the sale of a typical condo unit. Bare land condo units are still caught! So as a Seller, you must provide one (unless you’re smart and have crossed out this little section on the contract).
  2. As an owner or prospective owner, you want to know about the state of the property, and whether there are any major issues (such encroachment or permit issues etc.). With respect to the benefits of Real Property Reports in general, refer to my previous article on the topic.
  3. Most lenders will require it. So as a buyer, you will hit a wall when attempting to get funding in the absence of a Real Property Report and compliance. You will incur the cost yourself if the Seller doesn’t provide it (not to mention the potential delay in getting it completed), or you will need to purchase title insurance just to get the loan funded and the purchase complete on time.

So here’s what lawyers hate – in a very large number of instances, this is overlooked by all parties and nothing at all is obtained, and the contract isn’t amended to otherwise address the matter. So the issue rears its ugly head when a lender notices (and refuses to fund). Or the municipality or some third party discovers a major issue with an encroachment or permit or some such thing. Or the Buyer or Buyer’s lawyer notices and asks the poor Seller for it (quoting the section above) and there’s nothing to provide. Trust me, none of those scenarios are fun to deal with – and they can be costly.

So please address this. If you are a Seller, get a Real Property Report done before you list the property and be ready. If you are a buyer, make the enquiry and address the matter before you remove conditions.

So there you have it. Hopefully my next article can be something more uplifting and positive. Something like “why lawyers love it when people avoid doing what we hate” – or something like that.

Darren Richards is a partner with Richards Hunter Toogood. He focuses on both residential and commercial Real Estate and Corporate/Commercial Law serving both small and medium sized owner-managed business in the Edmonton and surrounding region. Mr. Richards also acts for major banking institutions and other lenders in relation to their commercial loan facilities. Reach him at: d.richards@rht-law.ca or or www.rht-law.ca

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