Sellers DO NOT Always Pay For The Certificate Of Location

Sellers DO NOT Always Pay For The Certificate Of Location

What is a certificate of location?

It is a document, prepared by a land surveyor, consisting of a report and plan on the current situation and state of real property (the lot and all things attached [immovable] to it) with respect to titles, lot and zoning regulations and municipal bylaws.

The certificate of location provides an expert opinion on whether there is a need for any changes because of existing encroachments, illegal views, discrepancies between the measurements taken and those originally deposited with respect to the property, etc.

At best it can take one week to obtain a new certificate of location; however, there can often be a several-week delay, especially during the high spring real estate period. A new certificate of location for one property or lot can cost from $400 to $1,000 depending on the land surveyor’s firm, time delay in which it must be produced (required before the closing date of the transaction), and the extent of work involved.

Who reviews the certificate of location?

One of the first steps notaries take is to verify if the certificate of location, provided by the seller*, is still valid. This is an essential document for the completion of the title exam on the property. The buyer’s financial institution requires it to provide a mortgage. It is required before the closing/date of the transaction.
* See "Who pays for..." below.

Why a new certificate of location?

Because of any of the reasons below, often the seller is informed that a new certificate of location is necessary for the upcoming sale and is at the seller's expense. This generally results in an upset seller demanding, “Why is the certificate of location that was used in the previous purchase no longer valid for this resale?”

First, the most common reasons a new certificate of location is necessary:

- A physical change has been made to the property since the purchased by adding, modifying or removing a shed, cabana, swimming pool, garage, fences; certain landscaping changes; enlarged a deck or dwelling.

- The lot cadastral number has changed since you bought your property (Quebec’s cadastral reform has been ongoing since 1994).

- The certificate of location is deemed “too old” by the buyer's financial institution (most institutions insist that the certificate of location not be older than 10 years, some even request one be under five years).

Second, it is not always the seller who is informed to pay for the new certificate!

Who pays for the certificate of location?

In Quebec, the bylaws say either party can pay for one. However, when using a real estate broker the mandatory forms are quite specific. Clause 6.4 in the Promise to Purchase states that the seller must provide a certificate of location describing the current state of the property. What is not clear to buyers and sellers is that it also states that the cost of any new certificate of location shall be borne by the buyer where the previous certificate proves not to have been amended.

Clause 6.4 (Promise to Purchase)

I always advise my sellers to validate and update their certificate of location prior to a sale. The fewer barriers or impediments in a sale will result in less frustration and less dollars lost should a sale be diminished or fail due to bad paperwork and resulting arguments between the parties. Yes! It happens.

However, buyers should be aware that they could very likely find themselves bearing the cost of a new certificate on the day of closing at the notary should the notary discover a certificate does not accurately represent the property being sold. Notaries have been known to accept shortcuts such as having the buyer and financial institution sign off on a faulty certificate when there are minor faults that are accepted by all parties.

What can you learn from this post?

The lesson here is to stop listening to the rumour mill and advice from friends, family and even professionals; READ ALL CONTRACTUAL PAPERWORK BEFORE YOU SIGN. If your broker runs you quickly through it or you are not provided a reasonable and sufficient time delay to make or respond to an offer, INSIST ON A TIME DELAY EXTENSION and review your contracts.

REMEMBER, YOUR BROKER WORKS FOR YOU and not the other way round.

Be careful out there people! INTERVIEW YOUR REAL ESTATE BROKER BEFORE YOU HIRE THEM.