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Understanding the terminology in real estate purchase agreements

Even the most basic real estate purchase agreement includes terminology that you may not understand.  That's just one more reason why you should retain an experienced real estate lawyer in a well established law firm before you complete any real estate transaction.   Some of the most commonly used terms in real estate buy and sell agreements are shown below.

Purchase Contract

A real estate purchase contract can be in any form. For a previously owned residential home, we most frequently see either the AREA (Alberta Real Estate Association) form used by realtors, or the Comfree (commission free) form of contract.

Contract Conditions

In either an AREA or Comfree contract, there are common conditions that you will want to consider adding to the contract, such as a condition for financing, inspection, insurability (satisfaction that you will be able to get the property insured), and lawyer review and approval. 

If the seller is completing renovations on the property, you should also consider adding conditions about the seller providing you with the proper permits and warranting that the necessary building codes were complied with. 

Note that a contract is not binding until all of the conditions have been waived or removed.

Buyer Beware

There is a general rule known as "caveat emptor" or "buyer beware," which means that unless the seller specifically warrants something about the property, you do not have the right to look to the seller for compensation if something goes wrong after you purchase the property. This is why it may be a good idea to have an inspection completed on the property.  Don't select an inspector until you know exactly what the individual does and does not inspect.

Real Property Reports and Compliance

A real property report (RPR) is a survey of the property, showing the location of the buildings, decks, fences, etc.   It's submitted to the municipality to ensure that the property complies with zoning in the area, and that certain permits were obtained.  Generally, the seller provides a warranty that the location of all the buildings complies with the bylaws and that none of the improvements on the property encroach on any neighbouring property.  This document is required by your lender, but it also helps you by confirming that there are no problems with compliance or encroachments that should be rectified before the deal closes.  Existing RPRs need to be checked to ensure they reflect any changes made since the last survey was done.

The Alberta Real Estate Association (AREA) contract mandates that the seller must provide an RPR and municipal compliance. If the seller does not have an RPR, the seller needs to retain an Alberta Land Surveyor to perform a field survey and prepare an RPR, which is then submitted to the municipality to obtain compliance. This takes time and may be costly for the seller.

Alternatively, you could purchase title insurance at the seller's cost, which takes less time and is less costly than obtaining a new RPR.  Title insurance is a guarantee of the quality of your title to the property.  If it is subsequently discovered that there is an issue with non-compliance or encroachments, the title insurance company may pay the cost to rectify the issue.  However, as with all insurance, the policy must be reviewed to confirm what coverage is in place. 

When you decide to sell your property, your title insurance policy will not apply to a new buyer.  Moreover, the new buyer may not accept title insurance and, depending on the contract, you may be required to obtain a new RPR for your buyer.


In some situations, outstanding issues are not resolved in time for your closing date.  For example, if renovations or repairs required to complete the sale are not done in time, buyers can instruct their lawyer to holdback an amount of money that will not be paid until the required work is done.

Holdbacks could also be required if the property is damaged during the sales process, which is why buyers should do a final walk through of the property with their realtor just prior to closing. 

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Sharek Logan & van Leenen LLP Real Estate Legal Team

Edmonton lawyer David van Leenen, a Managing Partner with the law firm Sharek & Co, where he specializes in legal services for the real estate and construction industry, representing both buyers and sellers.

David van Leenen

Managing Partner

Lawyer Pierre Blais, a solicitor in the Edmonton law firm Sharek & Co, where he handles personal injury law suits, real estate law and business and commercial law.

Pierre Blais


Pauline M. Blais


photo of Jim Di Pinto, Edmonton lawyer with Sharek Logan & van Leenen

Genuino (Jim) Di Pinto


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