There have been some changes with respect to material fact disclosure under TRESA.
First, let’s go to the definition:
“material fact means, with respect to the acquisition or disposition of an interest in real estate, a fact that would affect a reasonable person’s decision to acquire or dispose of the interest.”
In addition, there are specific facts that may be of relevance to a particular individual, although they may not affect the general population. For example, a murder, death, suicide or violent act which took place on the property.
There is also a procedure outlined to make such a Disclosure:
Disclosures etc.
2.2 (1) A disclosure, consent, declaration or acknowledgement required by the Act or the regulations must be written in plain language that is clear and concise and it must be presented in a manner that is logical and likely to bring to the recipient’s attention the information that is required to be conveyed.
(2) A disclosure required by the Act or the regulations must be identified by the prominent placement of the word “disclosure” using bold type and capital letters.
(3) The following rules apply in respect of a disclosure made under subsection 22 (1) or (3), clause 22.1 (1) (b) or subsection 22.1 (2), 22.7 (1), 23 (4), 23.1 (1) or (2):
1. The registrant shall provide a written declaration to each person receiving the disclosure that the disclosure has been made in accordance with the requirements of the section.
2. The registrant shall make best efforts to obtain a written acknowledgement from each person receiving the disclosure indicating that the disclosure has been received.
So, we have:
- Plain language
- Clear
- Concise
- Logical presentation
Then, we have to ensure that the word “disclosure” appears in the document:
- Bold type
- Capital Letters
As a result, at the top of the page, the word “disclosure must appear as follows:
DISCLOSURE
No reference is made to the minimum size of the type, or the font that is utilized. You could then add another line which effectively would serve as a “sub-title”.
The next step is the “written declaration” of the disclosure to the recipient and the acknowledgement from the recipient that they have received their copy.
What Facts and To Whom
TRESA contains the following:
Material facts
22.1 (1) A broker or salesperson who has a client in respect of the acquisition or disposition of a particular interest in real estate shall,
(a) take reasonable steps to determine the material facts relating to the acquisition or disposition;
(b) disclose the material facts to the client as soon as possible after the determination; and
(c) advise the client to consider whether the material facts affect their decision to acquire or dispose of the interest.
This means:
- Determine
- Disclose
- Advise
the client to consider whether such material facts affect their decision to buy or sell.
OLD Law under REBBA
Here was the applicable provision:
Material facts
21. (1) A broker or salesperson who has a client in respect of the acquisition or disposition of a particular interest in real estate shall take reasonable steps to determine the material facts relating to the acquisition or disposition and, at the earliest practicable opportunity, shall disclose the material facts to the client. (this remains the same)
(2) A broker or salesperson who has a customer in respect of the acquisition or disposition of a particular interest in real estate shall, at the earliest practicable opportunity, disclose to the customer the material facts relating to the acquisition or disposition that are known by or ought to be known by the broker or salesperson. (this is deleted)
The lower end disclosure obligation has been deleted since customers were also removed effective 1 December 2023 and no later than 30 March 2024 for those that continued. Without dealing with whether the old 21 (2) applies to customers look at the two factors in the lower standard:
- Known
- Ought to be known
Going forward the duty is to “investigate, determine and verify” the material facts. It doesn’t matter whether they are known or ought to be known. Figure it out!
At the present time, OREA has not released any Forms which would deal with this type of disclosure.
Let’s consider, in the meantime, for a Buyer using something along these lines:
DISCLOSURE
Material Facts
Re: 123 Main Street, Toronto, Ontario
Under the Trust in Real Estate Services Act, effective 1 December 2023, the Buyer’s agent has made a determination that there are certain material facts to be disclosed to the Buyer in accordance with s. 22. (1).
The following material facts have been identified for disclosure:
- Certain termite trails in the basement, in the furnace room,
- Mould in the bathroom behind the cabinets in the basement.
- ____________
- ____________
- ____________
The Buyer’s Agent hereby advises the Buyer to consider whether the above referenced material facts, or any ancillary material facts affect their decision to acquire an interest in the real estate or dispose of such an interest in the future.
The Buyer acknowledges that the Buyer’s agent has recommended that legal advice be sought concerning such disclosure and consideration.
Dated at Toronto, this _____ day of December 2023
___________________ ___________________
Witness John Smith (Buyer’s Agent)
ACKNOWLEDGEMENT
The undersigned prospective Buyer hereby acknowledges receipt of a copy of this Disclosure document,
Dated at Toronto, this ____ day of December 2023
___________________ ___________________
Witness Gordon Sumner (Buyer)
A document along the lines of the one noted above would be suitable for such a disclosure, recommendation for consideration and acknowledgement.
RECORDS
Under REBBA, while material facts were to be disclosed, there was no requirement to document such disclosure in a file.
Under TRESA, that has changed. Written disclosure is required and the Acknowledgement is to be documented and recorded in the Agent’s file. This is on a “best efforts” basis only, because TRESA doesn’t apply to Sellers or Buyers or Consumers. They can do whatever they want. However, the registrant will still have to document the “refusal to sign” in the file in addition to the disclosure document that was tendered.
This means: maintain careful records!
Brian Madigan LL.B., Broker