Title Insurance vs. Real Property Report (RPR) in Alberta: What You Need to Know for Real Estate Transactions

When it comes to real estate transactions in Alberta, buyers and sellers often come across two important terms: Title Insurance and Real Property Reports (RPR). Understanding the difference between them is crucial, as both play a vital role in the successful closing of a property sale. This blog will break down what RPRs and Title Insurance are, and explain the differences between closing with an RPR versus using Title Insurance.

What is a Real Property Report (RPR)?

A Real Property Report (RPR) is a legal document that provides a comprehensive representation of a property’s boundaries and structures. It is typically prepared by a land surveyor and shows details like:

– Property boundaries

– Building locations (house, garage, shed, etc.)

– Improvements (decks, fences, retaining walls)

– Any easements or right-of-ways

In Alberta, the seller is generally required to provide an up-to-date RPR with evidence of municipal compliance. This compliance ensures that the property adheres to local bylaws, such as the correct placement of structures on the land. An RPR helps the buyer understand any existing issues with the property, such as encroachments or zoning violations, which may need to be addressed before the sale can proceed.

What is Title Insurance?

Title Insurance is a policy that protects homeowners and lenders against certain issues that may arise with the title to the property. It provides coverage against problems such as:

– Fraud or forgery affecting the property title

– Undisclosed heirs or missing information on the title

– Encroachments that were not identified by an RPR

– Defects in title that could impact the ownership or use of the property

Title Insurance does not guarantee compliance with municipal bylaws like an RPR does, but it can cover certain risks and financial losses arising from issues with the property’s title.

Closing a Real Estate Transaction with an RPR

When a seller provides an RPR, it gives the buyer a clear picture of the property’s legal standing. An up-to-date RPR with municipal compliance ensures that:

– All structures on the property are correctly placed and meet local regulations.

– Any boundary or easement disputes have been resolved.

– The buyer is fully informed about the property they are purchasing.

Closing with an RPR can offer peace of mind, but it can also delay the transaction if the RPR is outdated or if compliance issues are discovered.

Closing a Real Estate Transaction with Title Insurance

Title Insurance is increasingly being used in Alberta real estate transactions, especially when the seller cannot provide an up-to-date RPR. In this case, Title Insurance is purchased (either by the buyer or the seller) to mitigate potential risks. Title Insurance can provide:

– Immediate coverage, allowing the transaction to proceed without waiting for an RPR or compliance certificate.

– Protection against issues like undisclosed encroachments or zoning problems that could affect the property after closing.

While Title Insurance is faster and often more convenient, it does not replace the need for an RPR in all situations. For instance, some buyers may still want to have an RPR to verify the exact state of the property and any potential issues not covered by the insurance.

Title Insurance vs. RPR: Which is Better?

When considering closing with Title Insurance in lieu of RPR, the choice depends on several factors:

1. Timing: If an up-to-date RPR is not available, Title Insurance can speed up the closing process.

2. Costs: Title Insurance is typically less expensive than ordering a new RPR, especially if compliance issues are present.

3. Risk Management: Title Insurance covers a range of title-related issues, but it does not guarantee municipal compliance like an RPR does. Therefore, buyers looking for complete transparency might still prefer an RPR.

4. Lender Requirements: In some cases, lenders may require either an RPR or Title Insurance, so it’s important to clarify their preferences early in the process.

Conclusion

Both Title Insurance and Real Property Reports play critical roles in Alberta real estate transactions, but they serve different purposes. An RPR provides a detailed legal survey of the property and ensures compliance with local regulations, while Title Insurance offers financial protection against title-related risks. Depending on the circumstances of your transaction, you may be able to use Title Insurance in lieu of an RPR, but it’s important to consult with your real estate lawyer to determine the best course of action.

If you have any questions about Title Insurance or RPRs and their role in closing real estate transactions, contact Jaswal Law for guidance. Our experienced team can help you navigate the complexities of Alberta real estate law and ensure your transaction goes smoothly.