When you're in the process of buying a new home, there are numerous elements to consider, and two of them are title insurance and a real property report with compliance. Both serve essential roles in a real estate transaction, but they address different aspects of property ownership and protection. In this blog post, we'll explain the differences between title insurance and a real property report with compliance, helping you understand their respective roles and why they matter.

If you are purchasing title insurance, it will be purchased through your real estate lawyer when the closing documents are signed. In most cases the cost is $200-$350. In the event that the seller states they are offering title insurance in lieu of a real property report, the seller’s lawyer and your lawyer will work out credits and debits to insure the correct party has paid for it.

Title Insurance

What is Title Insurance?

Title insurance is a type of insurance policy that protects homebuyers and mortgage lenders against potential issues related to the property's title.

These issues could include:

Title Defects: Title defects can arise from errors or omissions in public records, previously undisclosed claims, or liens on the property's title.

Title Defects: Title defects can arise from errors or omissions in public records, previously undisclosed claims, or liens on the property's title.

Forgery or Fraud: Title insurance provides protection against cases of forgery or fraud that may have occurred during the transfer of the property's title.

How Does Title Insurance Work?

When you purchase a home, the title insurance policy is typically acquired during the closing process. Your policy may cover you for as long as you own the property, and it can also be extended to include additional coverage for heirs or successors.

Benefits of Title Insurance:

Peace of Mind: Title insurance provides peace of mind, as it offers protection against unforeseen title issues that could jeopardize your ownership.

Lender Requirement: Lenders often require title insurance to protect their investment in your property.

Savings on Legal Costs: Title insurance may save you from expensive legal fees associated with defending your title in case of a dispute.

Real Property Report with Compliance

What is a Real Property Report with Compliance?

A Real Property Report (RPR) is a legal document that outlines the physical boundaries of a property and any improvements (e.g., buildings, fences, decks) on it. It's prepared by a professional surveyor or land surveying company and provides an accurate representation of the property's dimensions and features.

What Does "Compliance" Mean?

The "compliance" aspect refers to the property's adherence to municipal bylaws and regulations. The RPR is prepared by a surveyor. Typically it includes a statement from the surveyor verifying that the property’s improvements are entirely within the boundaries of the property and that there are no issues with encroachments, easements, or rights-of-way. This is then confirmed with a letter of compliance from the municipality or county to confirm compliance. This is not the same as confirming building permits.

How Does a Real Property Report with Compliance Work?

When you're selling your home, especially in areas with strict zoning or development regulations, a buyer may request an RPR with compliance. This report helps the buyer understand the property's physical layout and ensures that any structures on the property comply with local laws and regulations.

Benefits of a Real Property Report with Compliance:

Transparency: An RPR with compliance provides transparency to both buyers and sellers regarding the property's boundaries and compliance with local regulations.

Peace of Mind: For buyers, it offers peace of mind that the property they're purchasing complies with zoning laws and is as represented.

Legal Requirement: In some areas, a real property report with compliance is legally required to complete a real estate transaction.

In summary, title insurance and a real property report with compliance serve distinct roles in a real estate transaction. Title insurance primarily focuses on protecting the buyer's and lender's interests in the property's title, guarding against potential issues that might not be immediately apparent. On the other hand, a real property report with compliance is more about verifying the property's physical boundaries and ensuring that it complies with local regulations. Depending on your location and specific circumstances, you may need one or both of these safeguards to ensure a smooth and secure real estate transaction. Be sure to consult with your real estate agent and legal counsel to determine what's necessary in your situation.