Bare Land Condos: and Surveys
Updated: Nov 11, 2019
Seriously?! I still need a Real Property Report?
In an earlier blog post, we described a bare land condo as a condo unit (or strata title) comprised of land, very much like a non-condominium lot. So in a bare land condo the buildings and at least part of the landscaping are likely inside the unit boundaries, and therefore not Common Property.
We also addressed the important issue as to who (owner or condo corporation) is responsible for the repair and maintenance of the various aspects of the property (and who and how such repairs and maintenance are paid for).
So here is the question for this blog post:
if a bare land condo is in many ways like a regular (non-condo) lot - where the 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?
Well for those who immediately raised their hand to answer that – well done! I suppose you’re right, 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. We dealt with that last blog, so I’m a bit disappointed in you. Most bare land condos are maintained (grass mowed, snow shoveled) in the same way a regular condo is (read last blog 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. First, 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 (or something close to it): “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. Second, as an owner or prospective owner, you want to know about the state of the property, and whether there are any major issues (such as encroachment or permit issues). With respect to the benefits of Real Property Reports in general, refer to my blog articles on the topic.
3. Third, 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
This is not meant to be, and should not be construed as, legal advice for your specific situation. You should contact one of our lawyers here at Richards + Company for further information and to discuss your particular facts and situation.
Darren L. Richards practices real estate and corporate/commercial law with Richards + Company in Edmonton, Alberta; he is rated as one of the ‘three best real estate lawyers’ in Edmonton.