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Old RPRs + Sellers Who Forget
Real property reports (“RPR”) continue to be a huge source of trouble for sellers. Our current form of AREA contract (June 2023) says, "Closing documents will include an RPR showing the current improvements on the Property… with evidence of municipal compliance or nonconformance…".
Recently, our seller client provided his realtor and then us with a 2005 RPR and compliance. On the inquiry, the seller told his realtor and then us that the RPR continued to show the property the way it is today, no changes. If that was the case, the RPR qualified as "current" under the contract.
We provided the RPR and compliance to the buyer's lawyer as part of closing documents. The buyer reviewed but didn’t agree there weren’t any changes. It turned out there were a couple of sticks of chain-link fence added to the property after the RPR was done. The seller forgot about those additions. When initially reviewing the RPR, the Realtor didn't realize the two very small pieces of chain-link fence were absent from the property report.
The buyer would not accept the old RPR and demanded a new RPR showing the missing pieces of chain-link fence and a new compliance. This cost our seller $750.
The thing of it is that nobody really cares about the missing bits of fence. But, because of the contract wording, the seller is responsible.
There is a way around this.
Listing Realtors should add clause to the listing agreement something like, "Seller will provide, without any clause 6 warranties, only the RPR dated, (insert date) and compliance dated, (insert date) in full satisfaction of clause 10.2".
Then, when an offer comes in, add the same wording to the terms section currently 9.2
In my experience, most buyers will accept such an RPR, perhaps with the addition of having the seller paying for title insurance which is typically (but not always) around $250.
Lessons Learned: Deal with the RPR at the listing stage.
Look at the RPR if your client provides you with one, but don't be the guarantor that everything is still the same. Let the listing deal with what your client will provide and then amend the contract accordingly.
Protect yourself.
Cheers,
Barry
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