How to Accurately Use the Residential Measurement Standard

Alberta REALTOR® must use the Residential Measurement Standard (RMS) when measuring residential properties. This measurement standard helps consumers easily and accurately compare different types of residential properties.

The RMS offers a consistent means of representing the property above grade space. Among other things, the RMS sets out what parts of a property can be included in its measured-area. For example, if a room has a dormer with a ceiling height of only 4 feet, is it included as floor space? What about finished basements that are entirely below grade? 

When stating the area of a residential property, your REALTOR® must follow the RMS principles:

• Alberta REALTORS® must use the RMS.
• Identify if the measurement system is metric or imperial, and apply it consistently. Measurements must be calculated to within 2% of the RMS size.
• For detached properties, measure the property using the exterior wall at the foundation.
• For properties with common walls, such as half-duplexes, townhouses, and apartments, measure the interior perimeter walls (paint-to-paint) at floor level.
• Include floor levels that are entirely above grade. Below grade levels must not be included in the RMS area. If you have a split level, this may include two or three levels depending on where the grade sits.
• Include all additions to the main structure above grade areas within the structure if they are heated and insulated.
• The property must have a minimum floor-to-ceiling height of 7 feet. If the ceiling is sloped, the area with a floor-to-ceiling- height of at least 5 feet is included in the RMS area, provided there is a ceiling height of 7 feet somewhere in the room. This can eliminate bay window sitting areas.
• Exclude open areas that have no floor, such as vaulted areas.

Your REALTOR® also has a responsibility to ensure you understand the RMS and its implications, and is required to discuss it with you. This discussion will help you make informed decisions about the size and suitability of properties.

For more information about the RMS, you can read the Consumer Guide to the Residential Measurement Standard in Alberta.

Closing Delays and How to avoid them

Whether you are buying or selling a property, it’s important to understand that there can be delays in a real estate closing. A closing delay is something you want to avoid. There are several reasons possession may not be possible on the date you have on your purchase agreement. Sometimes upexpected or negleted items occur and nobody wants to be left homeless on their possession date.

REALTORS® are aware of these delays (because we don't get paid until after possession day), we help our clients avoid closing delays for a smooth transaction and a happy buying and selling experience. Below is a list of possible closing delays.

You choose the wrong lawyer

Not all lawyers are familiar with real estate transactions and this can cause delays in the transfer of title. At EdmontonHousesAndHomes, we encourage our clients using real estate lawyers.

Unreal closing dates

Unlike other provinces in Canada, Alberta's land title transfer process begins prior to you meeting with your lawyer. In the province of Alberta, it takes time to process a the title of a property to another person. This time frame will vary according to the market and land titles processing time. As a rule of thumb - a good closing date is 1-2 months after you write your offer to purchase.

Your bank revokes your mortgage

Yes. This does happen. The bank has the right to secure their mortgage and in the event that something changed, such as a job loss or the buyer also purchased a vechicle, changing their debt-ratio, the bank can pull your mortgage. REALTORS® will remind their clients not to make any big purchases until they recieve their house keys.

Real Estate Appraisal Issues

Sometimes (usually in a busy market), the bank did not send out the appraiser prior to telling you your mortgage has been approved. If the property does not appraise out at your offer price or higher, the bank can refuse to forward funds, the seller will need to reduce the price of the property or the buyer must come up with the diffence between the offer price and the appraised value.

Terms or contingiencies of the contract

If you have a walk through term written into your agreement and you find out the terms after the contract have not been fullfilled, this can be considered a breach of contract. These items could be as simple as the seller removing the dog feces in the back yard to more substantial issues such as a builder not finishing the completion or repairs. It is always best to have a walk through clause written into the offer prior to the buyer removing their conditions.

Problems with the title

Edmonton REALTORS® are obligated to pull title when they are writing an offer to ensure the persons selling the property is correct as well as ensuring there is enough equity in the property to be sold. Sometimes, prior to closing, after conditions have been removed, the seller has taken out a second or third mortgage and there is not enough equity to close. If this happens, there is major liablity issues that your lawyer will discuss.

The RPR does not have compliance

In the REALTORS® purchase agreements, there is a cluse reguarding the real property report and compliance which the seller has signed and agreed to. In the event the seller does not have compliance, there is an issue. A common one is when the seller has change the deck or a non-movable shed had been added to the property.

Homeowner insurance is not secure

The buyers lawyer will ask the buyer to bring in the insurance binder. This is basically a peice of paper saying the buyer has insurance on the property. If there is no insurance, the bank can not forward the mortgage funds.

Closing costs

If either the buyer or the seller does not have enough cash to close, there's a problem. Read more on closing costs.

Unclear terms

When writing an offer to purchase, the terms, conditiond, amendments and addendums must be crystal clear to avoid misunderstandings. The interpatation of the buyers lawyer may not be the same as the sellers lawyer. If the written phrase is not cytal clear, have your REALTORS® re-write it in lamens terms.

The buyer changes their mind

During the last Edmonton real estate crash, we seen this happen often due to the crashing real estate prices and buyers did not want to pay the agreed amount when the value of the property had substantially decreased. In our REALTORS® contracts, there are items put in place with the consequnces of such action. To avoid this in a soft market, be reasonable with your negotitaions. - The buyer can walk away.

The seller is unable to vacate on time

Alberta REALTOR® purchase contracts state that the property must be vacant by noon on the day of possession. However, sometimes the seller is still in the property due to circumstance beyond their controll. If this happens, it is a breach of contract. The best thing do is take your lawyers advice, there is some conpensation.

Not working with a qualified REALTOR®

The majority of Edmonton Remax REALTORS® have closed hundreds and hundreds (some have closed thousands) of real estate transactions. Using an experienced REALTOR® can be the differnce between being homeless and a seemless closing.

We pride ourselves on helping our clients with a smooth real estate transaction and a great buying and selling experience. If you or thinking about buying or selling and need experienced Edmonton Remax REALTORS®, email us. We are here to help.

How to Write the Right Real Estate Offer

The hardest part of buying a home is house-hunting to find the right property. Once you have found a property you like, the next step in to write an offer. Purchase agreements in Edmonton are standard Alberta real estate contracts and consist of the same clauses. What makes the difference is what you add to the agreement and negotiations skills.

First, we need to add the most important criteria which include:

• Seller Names
• Buyer Names
• Property Address
• Legal Description
• General Terms of the Agreement
• Deposits
• Chattles
• A Representation & Warranty Clause
• Conditions & Terms
• Closing Procedure Process
• Additional Attachments id required
• A Remedy Clause
• Notice & Document Clause
• Offer Price
• Signatures & Dates

Sellers Names: Ensure the property title matches the names exactly as set out on the title. If there is only one person on tile who is married, have a dower consent form validated by a notary or real estate lawyer.

Buyer Names: Offers must be written with the legal name of a buyer and persons obtaining the mortgage or if in the name of a company, additional documentation will be required.

Legal Description: This is the legal address of the property. For Single-family homes, it contains a Lot, Block and Plan number. If it is a condominium, there may be an additional legal address for a storage unit or parking stall.

General Terms of the Agreement: usually include a surplus of items and how they factor into the sale of the property from who is responsible for providing a real property report, determining non-resident status for income tax purposes, who will be holding the deposits, any known defects in the property and other terms.

Representation & Warranty Clause: To ensure the person signing has a legal right to sell the property along with any chattels and the physical property is not situated on a utility right-of-way or encroaching on the neighbours.

Conditions: Are items that say " When I receive _________, I will proceed with the sale of the property." These items are satisfactory financing, satisfactory property inspection and satisfactory review of condominium documents. The Seller may also add conditions such as review of contract from lawyer, final probate or finding another property.

Terms: Are items that either the buyer, seller or both have to agree upon to complete the sale. These items can range from picking up dog faeces in the backyard, to having the property professional clean prior to moving into repairing items found in your inspection.

Closing Procedure Process: Sets out the terms in how the title will be cleared of the existing mortgage caveats or liens against the property as well as who will be responsible for any closing delays. Read more on possible closing delays

Additional Attachments can include a huge list of items, but the most common attachments will be either an addendum, amendment to the original offer, a subject to sale form or disclosure statements

Offer Price: This Will be determined on a set of factors from the current market value, supply and demand, absorption rate, economic factors, property condition and location, how much the buyer & seller are willing to agree upon and the negotiation skills of your Realtor. Ask your Edmonton Realtor for a Buyers Comparative Market Analysis to determine fair market value prior to making an offer.

Need help in writing the right offer? Give us a call at 780-237-7074 and for a small fee, we will help.

Do you really need a property inspection when purchasing a home in Edmonton?

A property inspection is an objective visual examination of the physical structure and systems of a house, from the roof to the foundation. It is for the sole benefit of the purchaser and is usually subcontracted to a certified licensed residential real estate inspector, paid for by the buyer, and can take one to four hours depending on the size and condition of the property. At the end of your inspection, a standard home inspector’s report will be supplied covering the condition of the home.

A property inspection can identify the need for major repairs or builder oversights not known to the seller which can lead to unpleasant surprises and unexpected difficulties in the future. Buying a home can be the largest single investment you will make and spending a few hundred dollars for peace of mind is money well spent.

Property inspection components covered include:

• heating system including furnace and hot water tank
• the central air conditioning system
• carbon monoxide and fire alarm detectors
• interior plumbing using both visual and water residue tools
• mold issues and water damage
• electrical systems
• the roof & attic
• visible insulation of walls, ceilings, floors, windows, and doors using a thermal ray tool
• foundation & basement
• other structural components which may need major repair or replacement.

Depending on your chosen property inspector, there may be some things that will not be inspected such as things that can not be seen visually and appliances. You may want to check that these chattels are in working order.

Foreclosures:

If a home inspection is not allowed on a bank foreclosure offer to purchase, it is still a good idea to have one done at a later date.

New Homes:

In Alberta, builders must supply a new home warranty at closing, however, new homes should ALWAYS have a home inspection done by a licenced, certified building inspector. Building a house takes time and there are always things that get missed. It is easier to address these concerns before you remove your inspection condition.

Nothing is Perfect:

During the inspections, there will be items that will be found. There is no such thing as a perfect house. Usually more items are found on new builds rather than resale homes. 

What if there is an issue:

Hopefully you have an inspection contingency if the report reveals problems. If the inspector identifies problems, it doesn’t mean you should or shouldn’t buy the house. Talk it over with your real estate agent. There are a few options to address any concerns you have.

How to Fire Your REALTOR®

There are a few reasons you may want to fire your REALTOR®. If you feel you made a mistake by signing a listing agreement with the wrong REALTOR®, the best thing to do is to correct it and move on. If your Lawyer or Doctor was not working in your best interest, wouldn't you fire them too?

Your listing agreement is usually for a period of three to six months (sometimes longer) and you are entitled to cancel at any time. This can be done with a standard Alberta real estate form. Edmonton REALTORS® (depending on the agency designation) also has the option of terminating the listing contract at any time without your consent, but this rarely happens.

If you have hired the wrong real estate company or agent to represent you, fire them. Do it professionally and do it in writing. There are a few things to consider prior to firing your Edmonton REALTOR®. All of these contingencies will be set out in your original listing agreement.

Who owns the listing?

The listing is owned by the brokerage, not the REALTOR®. If you have a problem with the agent, call the broker. If you have a problem with the broker, call consumer affairs and the Edmonton Real Estate Association.

Is there a fee to cancel your listing agreement?

There may be a cancellation fee in the listing agreement. This fee is usually the cost to cover expenses already paid by your Edmonton REALTOR® prior to your cancellation. The service fee amount will be set out in the agreement you signed. However, if you paid a fee upfront, there usually is no cancellation fee.

Will I still have to pay a commission after I fire my REALTOR®?

If a buyer was introduced to your home during the term of your listing agreement and you sell it privately (during a specified time in the agreement) to that same buyer, commissions will be payable.

Can I hire another agent immediately?

Yes. Once your home is off of the market, you are free to list your home with any licenced real estate agent.

When you are ready to fire your REALTOR®, simply inform your agent that you would like to cancel the listing and ask him to provide you with the listing cancellation form. There will be two choices on this form. Make sure you have a property termination end date, the office broker (not the agent) has signed and you have received a copy.

1. Unconditional termination

• Which allows no further obligations for either the seller or Realtor

2. Conditional Termination

• Your agreement will end on the termination date but your obligations will continue under the terms of Section 10 of the Exclusive Seller Representation Agreement. There may also be an additional term.

If your Edmonton REALTOR® fails to provide this form within a timely matter, contact their brokerage and tell them about your grievances with the agent.

Can you fire a Buyers Agency or Buyer REALTOR®?

Yes. It is a different form, but you are free to fire your REALTOR® when buying. There may or may not be a small fee to get out of the agreement. This fee would have been set out in the original buyers brokerage agreement which states: If you change your mind about looking for a property, you must tell us in writing. You must reimburse us for our reasonable expenses up to the time you tell us. Reasonable expenses will include: (If this section is blank - no penalty will be payable). However, this does not allow you to approach a seller that has been introduced to you while working with your realtor. If you do this, you will have to pay a full commission as set out in the original buyer brokerage agreement.

If you have any questions, both RECA (the Real Estate Council of Alberta) and EREB (the Edmonton Real Estate Board) have plenty of great information to help you make the best decision for you!

Have questions about firing your REALTOR®, feel free to reach out. We are here to help.

Understanding Buyers Brokerage Agreements in Alberta

Buyer Brokerage Agreements have been around for several years, and have only been mandated for the last decade. This legal change created security for both consumers and REALTORS® in Edmonton and throughout Alberta. This form states the responsibilities of both the buyer and their real estate agent including:

• The mandated fiduciary duties, to protect the interests of the buyer
• The buyer cannot hire more than one broker or real estate agent to represent them
• The term of the agreement. Depends on how long the real estate agent chooses to work with a buyer, this agreement is normally 30 Days to 1 year and allows enough time for the buyer to purchase a home. If the buyer has not purchased a home during the time frame, they may extend the agreement or sign with another agent. (The time frame is negotiable)
• The retainer fee (normally $1000 - $2500) is held in trust by the real estate agent/broker and forms part of the buyers down payment. This means the amount of your retainer will be used as part of your downpayment. However, if you do not purchase within the specified time range, your retainer will default to the real estate office trust account.
• Remuneration is stated in the agreement and can not be changed without written consent from all parties once agreed upon. This protects the agents' commissions and allows the buyer to know how much the REALTOR® receives for their services. (usually paid for by the sellers)
• While under the agreement, If the buyer elects to purchase a property without the help of their real estate agent, they will owe the agency the commission set out as per their Buyers Brokerage Agreement.

• Showing you all properties you may be interested in as soon as possible
• The duration of the agreement
• Advertising for properties that meet your search criteria (paid for by the buyers agent)
• Pulling land titles certificates to ensure closing capacity
• Setting you up on Auto-prospecting.
• Fiduciary Duties of the real estate agent
• Explaining and helping to prepare writing offers to purchase
• Negotiate favourable terms for the buyer
• Provide a Buyers CMA to ensure you are not overpaying
• Inform you of all aspects of your offers including any counters
• Assist you with a chose of mortgage brokers, inspectors, lawyers, etc
• Any other relevant services you may require 

For more information on working under a Buyers Brokerage Agreement, feel free to contact us.

Does Your Real Property Report Have Compliance?

If you are selling a home and have been told that there is no compliance or you have a non-conforming property, don't panic if you have not accepted an offer to purchase. Your Edmonton Remax REALTOR® can walk you through how to write or amend the purchase agreement to ensure you will not be penalized. However, if you have sold your home and are just finding out, you have no compliance or non-confirmation, talk to your lawyer.

The residential AREA real estate purchase agreements contain a clause that clearly outlines the factors of the real property report....

"The current use of the Land and Buildings complies with the existing municipal land use... buildings and other improvements on the Land are not placed partly or wholly on any easement ... do not encroach on neighbouring lands ... directly on the real property report ...location of Buildings and other improvements on the land complies with all relevant municipal bylaws, regulations or relaxations ... prior to the Completion Day, or the Buildings and other improvements on the Land are non-conforming buildings as that term is defined in the Municipal Government Act (Alberta) ...current use of the Land and Buildings and the location of the Buildings and other improvements on the Land comply with any restrictive covenant..."

Drawbacks of Non-Compliance or Non-Confirmation:

Knowing in advance that there may be an issue with compliance or non-confirmation on your real property report will save time, money and stress, by dealing with the issues in advance. Depending on the nature of the deficiency. A request to the municipality for a certificate may lead to a requirement for substantial alterations, relocation or destruction of certain structures.

The buyer may choose not to go ahead with the purchase until deficiencies are resolved. Under the AREA contract, the warranties provided by the seller only relate to development issues and not building code issues; and while there is some debate among lawyers on this issue, most take the view that any building code deficiencies including the lack of building code permits are the responsibility of the buyer.

Knowing in advanced provides certainty for both buyer and seller at the time of closing regarding compliance with development issues and provides the opportunity for a buyer to have the seller remedy any deficiencies in this regard prior to or in conjunction with the closing.

It can be used to address the validity of permits that may or may not have been pulled to add, replace or alter a deck, garden shed, gazebo or greenhouse. Any concerns or questions regarding issues with your real property report, please contact your real estate lawyer. Note* The town of Morinville no longer requires compliance.

Why You Should Always Pull a Land (Property) Title Search

Basic information on a property title will include:

• The current owners' name: In the event of an estate sale, probate may or may not have been completed and your real estate agent will ensure the person selling the property does have power of attorney. In the event, there is only one person on the title in a marriage, a dower consent will also be needed to complete the sale.
• The Legal description: The municipal or mailing address is different from the legal description and includes a block, lot and Plan number.
• The amount of the last mortgage, any second or third mortgages or the original purchase amount at the time of purchase or there may be a nominal fee.

Other things which can be revealed on a property title search may include:

• Outstanding or owing property taxes, special assessments, delinquent condominium fees which have not been paid by the seller.
• Outstanding creditors including other financial institutions and businesses for things like unpaid vehicle loans, furniture stores, construction loans, personal loans, etc
• A lis pendens, which is normally added by a lawyer during divorce procedures and "freezes" the transfer of a property until all parties are satisfied.
• Easements and Liens from a third party, such as the municipality, utility company or Environmental liens, who may have rights to use part of your property.
• Covenants are restrictions on the land that can limit what can be built on it, where it can be built and from what materials it may be built. Breaching a covenant can have serious consequences so it is necessary to be aware of any covenants on your property.

It is important to pull the land title certifictae prior to writing an offer. If you wait until you go in to sign with your lawyer, it can cause closing delays.

What is a Real Property Report?

A Real Property Report (also known as the RPR) is a legal document that clearly illustrates the location of significant visible improvements relative to property boundaries. It is a plan or illustration of the various physical features of the property, including a written statement detailing the surveyor’s opinions or concerns.

Who needs a Real Property Report?

Part of the standard real estate contracts in Alberta will have a term in the document states the seller will provide a current real property report with the compliance report to the purchaser upon closing. Prior to putting your home on the MLS System and/or Realtor.ca, Sellers should order a new RPR to protect themselves from potential future legal liabilities resulting from problems related to property boundaries and improvements. Your REALTOR® can assist you with this process to ensure your property complies with municipal requirements.

Do I need a Real Property Report for a Condominium?

Bareland Condominiums require Real Property Reports. Conventional Condominiums do not require an RPR.

How does a Real Property Report protect you?

Purchasing a property may be the largest financial investment you ever make. With a Real Property Report, owners are aware of any boundary problems. They know whether their new home is too close to the property line, or part of their garage is on their neighbour’s land or vice versa. Since legal complications may occur if a sold property fails to meet requirements, a Real Property Report protects the seller.

What is on a Real Property Report?

The legal location description of the property and municipal address, dimensions and directions of all property boundaries, any improvements on the property, right-of-way or easements, any visible encroachments, a duly signed certification and opinion by an Alberta Land Surveyor and a permit Stamp where applicable.

How much does a Real Property Report cost?

The amount of work to prepare a Real Property Report varies between properties. Lot size and shape, number of buildings, natural features, age and availability of the property boundary information all affect the cost. However, if you are planning on selling your home in the near future, the sooner you order your Real Property Report, the more economical it will be plus any problems can be identified and resolved before a sale is finalized.

Should you get title insurance in lieu of a Real Property Report?

Title insurance is not a replacement for the RPR. There are item which are not covered and could be a concern at a later date... read more on title insurance

Should I get title insurance in place of a the real property report?

If possible, it is best to have a current real property report with compliance when buying or selling a home to ensure all property buildings are within the municipality guidelines. If an RPR is not an option, title insurance is a good substitute.

Title insurance without a real property report and compliance is acceptable to most major mortgage lenders and will often provide coverage for the lender for known defects. Unlike other insurance products, there is only one premium paid at the time of closing which provides coverage to the owner throughout their ownership of the property. It also offers a wide range of protection for issues that are not covered by an RPR and compliance.

Title Insurance Benefits include

• Intervening registrations – Anything registered on the title between the time the lawyer submits to the Land Titles Office and the time of actual registration.
• Unknown Liens, encumbrances, tax arrears or defects in the title to a property.
• Unknown special assessments on condos that were implemented prior to closing.
• If an RPR or compliance is not obtained, it covers any defects that would have been revealed by an accurate up-to-date RPR and compliance.
• The forced removal of an existing structure with the exception of a boundary wall or fence where there is only limited coverage
• Forced compliance with work orders or deficiencies on an existing building permit.
• Loss of priority due to matters such as construction liens, agreements on a title, and other mortgages.
• Another party claims an interest in the property.
• Protection against title defects or encumbrances that were unknown or undiscovered at the time of closing.
• Protection against identity theft, mortgage fraud, and fraud against the title.
• Cost savings. Typically, the cost for title insurance is far less than the cost of an RPR and compliance and is available on short notice

Drawbacks of Title Insurance

• It is an insurance product. This means when an issue arises, it may not be covered by the policy and if there is coverage the insurer can decide the method used to solve the issue which may not be the preferred choice of the insured party.
• There is a lack of disclosure and certainty, especially for the buyer, at the time of closing. If an issue is discovered later, it is more difficult to pursue the seller for a fix after closing.
• There is no coverage for known defects, except for some coverage for the lender only.
• There must be some form of enforcement or government action to trigger coverage in most cases. For example, the previous owner did renovations that do not meet the requirements of the building permit or development permit. The title insurance will only pay for the cost to fix these deficiencies if there is some form of enforcement and not simply due to the deficiencies.
• It does not guarantee that all structures will remain in the current state. For example, if the municipality mandates the alteration or destruction of a certain structure, the title insurance company may pay for the cost of appealing that decision however they cannot guarantee a favourable result.
• The coverage of title insurance is for the buyer only (not the seller).
• If a buyer or their lawyer purchases a lender only policy that is sufficient to close the deal however the buyer still has no title insurance protection.
• There is no specific protection or coverage for the seller. If a claim is made and the title insurance company determines it is the seller who created the deficiency, the title insurance company can pursue the seller for recovery of the costs they have paid.
• In most instances, title insurance only defers the need to deal with a particular issue. It does not solve it. The issues will still be there when the property is resold.
• Title insurance cannot be passed onto a new owner. Every new owner must purchase their own policy.

For more information on real property reports and the effects on the resale of your residential dwellings and a free Edmonton Home Evaluation,  contact one of Remax Elite Realtors.