Legal Brief for July, 2020

Get That Compliance Certificate!

The current standard form real estate purchase contract in use in Edmonton for single family homes requires the seller to provide to the purchaser a real property report (a survey) and a compliance certificate report.  The compliance certificate report is a document obtained from the City of Edmonton's planning department.  The compliance report confirms whether what is built on the property complies with the zoning regulations for the property and whether all required permits (development and building) have been obtained from the City for what has been built on the property.

The "what has been built on the property" of course includes the house and, if applicable, a detached garage.  It also includes smaller structures that are commonly found in or around residences, including decks, hot tubs and permanent sheds.  It is very common for homeowners after they have moved in to tear down an existing deck and replace it with a deck of their own design and materials, in many cases larger and higher than what was there when they moved in.  It is also very common for such homeowners to blithely ignore the fact that for any new structures being built on a property they are required to obtain both a development permit (which authorizes something to be built on the property) and a building permit (which authorizes the actual plan for the construction of the item).

It is critical for a buyer of a property to make sure that they receive a compliance report on the property as part of their closing documents, and that their lawyer has an opportunity to review the compliance report with the buyer prior to closing.  A recent situation involving a transaction I was in will illustrate the reason why.

In this case the residence had a screened in room at the rear of the house.  The homeowner had previously built a small landing on the exterior of this room, with a set of stairs leading from the landing to the back yard ground level.  The homeowner thought everything was good.  Unfortunately, not so much.  When it came time to have the City planning department review the real property report when the property was being sold, the City advised that the landing structure was improperly attached to the rear of the residence.  In order to obtain the required compliance certificate report giving the structure the "all clear" from the City, the homeowner was required to have the method of attachment of the landing structure reconstructed.  This process entailed having to hold back funds from the sale to complete the work, obtaining quotes from a contractor and then arranging for the work to be done.

Due to seasonal issues the process dragged on for more than a year.  The purchaser fortunately was protected by having ensured, through their lawyer, to receive the appropriate compliance report prior to the closing of the purchase, which enabled their lawyer to stipulate that the corrective work would be undertaken.  If the purchaser had not received this documentation they would have been responsible for having it done whenever they eventually sold the property, and at their cost instead of at the cost of the vendor, which is the party that should be paying for it.

The moral of this story - when you are a purchaser, always insist on making sure your lawyer has access to a real property report and compliance certificate for the property prior to the closing, so that any permit issues and compliance issues can be identified and addressed at the time of closing so that you don't end up having to pay to correct them years later.