What Should Your Real Estate Agent Have Told You?

The phrase “Material Fact” is a fact that would or could be important to a person buying or selling. The Real Estate Council of Ontario (RECO) defines it as a fact that could do one of the following:

• Affect a person’s decision to buy or sell a property, 

• Affect what price to offer or sell for, and/or 

• Determine what conditions to include in an Agreement of Purchase. 

In one of RECO’s industry bulletins to the real estate community it states that what may be a material fact to one buyer or seller may not be to another. That in no way excuses an agent from disclosing such facts. 

When working with a client…

…RECO says that real estate agents have an obligation to:

“1. Take reasonable steps to determine the material facts; and

“2. Promptly disclose those facts to the client.”

When working with a customer…

…whether buying or selling, REALTORS® have to disclose the material facts that are known by or ought to be known by the broker or salesperson.

Though there appears to be a distinction above between working with a client or a customer, the key phrase “ought to know” in the customer statement above pretty well sums it up. REALTORS® are required to find out and, where possible, confirm material facts, and not just accept a client’s representation. 

Discovery and Disclosure 

It goes without saying that, if known, a REALTOR® should disclose anything that might affect a buyer’s willingness to buy, what price to pay and what due diligence matters need to be performed. Two questions arise from this. How are material facts discovered, and what facts require disclosure? The one place to start in determining such facts is to ask the seller. Any number of disclosure aspects can also be verified with a reasonably comprehensive inspection of the home to be listed, both outside and inside (i.e. plumbing, electrical). Some things can be verified with city records (i.e. zoning); others through the closing documents available to the seller from when he purchased, to name a few.

So what material facts require disclosure? 

The following list, though not exhaustive, are examples mentioned by RECO with a few edits. They are:

• Insulation type (i.e. asbestos, vermiculite), wiring (knob and tube or example, plumbing type (i.e. Kitec pipes), aluminum wiring,

• History of flooding, water/moisture in basement, roof or other areas; structural damage or fire,

• Whether renovations were conducted with a permit, property taxes

• If a property had been used as a grow-op or other illicit purposes,

• Any rights-of-way, allowances or restrictions, encroachments or easements, 

• Existence of nearby businesses or facilities that may impact quality of life (prisons, quarries, industrial facilities, airports, rail lines, etc.),

• A death in the home, especially a suicide or murder.