Wednesday, November 21, 2012

When Your Dream Home Was the Scene of a Nightmare

Yahoo News picked up a Toronto Star story today about a Bowmanville, Ont. couple who bought what they thought was their dream home, only to discover that the property was the scene of a double murder 15 years earlier.

The owners are now suing their real estate agent, claiming she should have disclosed the house's sordid past to them. They are also suing the former owners, who purchased the property after the crime.

According to the Toronto Star story (link here until it goes dead): 

"The Real Estate Council of Ontario, which regulates the industry, issued a warning to (agent Mary) Roy last month on the grounds that she “deliberately withheld a material fact known to her” regarding the murders from the buyers, contrary to the Real Estate and Business Brokers Act. The decision followed a complaint by the (buyers) earlier this year.
The council cited several provisions in the act’s code of conduct, including not engaging “in any act or omission that, having regard to all the circumstances, would reasonably be regarded as disgraceful, dishonorable, unprofessional or unbecoming a registrant.”

The Star story goes on to say that the case raises questions about what a real estate agent is obliged to disclose.

"Lawyers say the case involves a grey area in common law on the issue of “duty to disclose” — and how to assess what information that entails.
If the claim proceeds to trial, it could become a test case for the doctrine of “caveat emptor,” or buyer beware, and whether the couple’s situation is an exception to that general rule."

You will be glad to know that in Quebec there is no such ambiguity about what an agent is obliged to disclose to a potential buyer. The Real Estate Brokerage Act (REBA) says:

 A broker or agency executive officer must inform the party represented
and all other parties to a transaction of any known factor that may adversely
affect the parties or the object of the transaction.

In plain English, if I know something about a house,I must disclose it, whether the buyer asks or not.
The law goes further. Each time a client and I sign a brokerage contract before listing a property for sale, we also complete a Vendor's Declaration. This six-page checklist is where sellers declare everything they know about their house, from the age of the roof to - oh yeah, by the way -  someone was killed here.

"To your knowledge, has there ever been a suicide or violent death in the immovable?"

In case that is too narrow a question, the declaration also inquires:

"To your knowledge, are there any other factors relating to the immovable not mentioned in these declaration that are liable to significantly reduce the value or restrict the use thereof, reduce the income generated thereby or increase the expenses relating thereto (e.g. development or construction project, environmental problems (e.g. radon, abnormally high noise level, unpleasant odor, etc.)"

The latter question covers pretty much any other eventuality, whether the house was used as a brothel, a marijuana grow-op or a slaughterhouse for chickens. (Where did THAT come from?)

The vendor's declaration is attached to the listing so that other agents can see it. Buyers are given a copy before they make their offer and must sign and date the declaration as proof that they are aware of all a house's quirks and defects.

There's no gray area in Quebec law about whether or not you must disclose. When in doubt, disclose.

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