Check Municipal Compliance Before Writing an Offer

You've found the perfect home - great location, layout, price, an awesome basement and a huge deck. But how would you view the home if that deck and basement came with the hidden costs of a non-compliance survey report and a lack of building permits?

The Survey Report

In North America, compliance with municipal bylaws addressing requirements dealing with the size and location of improvements to real property is provided through a survey report certificate. States and provinces have different names for survey reports such as Real Property Report (RPR), Surveyor's Real Property Report (SRPR), Building Location Certificate (BLC) and Survey Certificate, to name a few. The survey report is the legal document prepared by a licensed surveyor that illustrates property boundaries and structural additions/improvements relative to the boundaries. A municipal compliance stamp on the report confirms that the improvements to the land comply with the municipal bylaws and regulations. The reports must be 'current', which means that there is municipal compliance and there have been no changes since the report was issued and received a stamp of compliance. If the report is not current due to subsequent additions, a certified land surveyor can be hired to update it and resubmit it to the municipality for compliance review and certification. If the report has expired without any changes to the property, in some regions the property owner can sign a Statutory Declaration or Affidavit stating that the existing report is accurate. Throughout the U.S. and Canada, lack of municipal certification of a survey report can impede title registration and obtaining a mortgage. It has a negative effect on property value. The costs of obtaining municipal certification for a survey report depend on whether any physical changes to the structural improvements must be made and what the changes to the improvements are.

Building Permits

Building permits are required municipal authorizations to start construction, modification, repair or demolition to structures on your property. Completed building permits are permits where the work has been reviewed and approved by the municipality. Building permits help ensure that the work is completed according to regulations and will provide a safe living environment. In many regions the lack of completed building permits is considered a material latent defect in a real estate transaction, which means that a buyer can sue a seller who did not disclose that the property had unpermitted work. The explanation "I don't have a permit because of the fee and it would have raised my taxes" doesn't add up. Unpermitted work reduces property value and makes selling a home more difficult.

Types of Building Permits

Municipalities generally issue permits to authorize work in the following categories: development, building (structural), mechanical (plumbing and gas) and electrical. The type of project will determine how many permits are required. A development permit approves the use of a site as well as the size and location of the structures and is the initial permit that must be obtained. Building permits generally ensure that the work conforms to building codes. Mechanical and electrical permits are required for any work involving plumbing, gas or electrical.

Retroactive Application for Permits

It is possible to obtain permits retroactively in many instances. However the inspectors assigned will likely require some demolition in order to carry out the necessary inspections. Any work not completed to code will, of course, need to be corrected before a completed permit is issued. It is very important that your REALTOR® ask the seller for and obtain proof of the status of survey report/RPR compliance and building permit completions for any property that you would like to submit an offer on.

About the Author

Peter Fuchshuber is a residential and commercial REALTOR® helping buyers and sellers in Edmonton, Canada. He can be contacted through his website.