Disclosure of Related Party in Ontario

Role Of Audit Committee In Related Party Transactions - iPleaders

Question:

My close relative is purchasing a home, I am his realtor…which disclosure form do I use and which party signs it:

1) 160 – Registrants disclosure of interest
2) 610 – Disclosure of Benefit payable

Answer:

You have a party who wishes to buy a property. You need them to sign Form 610 if you are getting paid for a referral to a mortgage broker etc.

It doesn’t sound like you have to complete Form 160 unless you have an interest in it yourself and you are not the Listing Agent and you don’t have another Buyer.

When it comes to “related party” disclosures, you have to let your own clients and customers know, not anybody else.

So, in this case, you don’t have to tell the Listing Agent or the Seller. Quite frankly, they really don’t care.

The confusion in all of this arises since Form 160 attempts to put s.32 REBBA, and s. 18 Code together in one Form, when, in fact, they are two separate and distinct disclosure requirements.

And, of course, there is the general fallback position of “tell everybody, everything, all the time, how bad can it be”.

Here are the relevant sections of the Act and the Code.

The Act

Acquisition or divestiture by registrant

32. (1) Unless the registrant first delivers to all other parties to the agreement the notice described in subsection (2) and the other parties have acknowledged in writing receipt of the notice, no registrant shall, directly or indirectly,

(a) purchase, lease, exchange or otherwise acquire for himself, herself, or itself, any interest in real estate, or make an offer to do so; or

(b) divest himself, herself, or itself of any interest in real estate, or make an offer to do so. 

Contents of notice

(2) The notice referred to in subsection (1) shall be in writing and shall include,

(a) a statement that the registrant is a brokerage, broker or salesperson, as the case may be;

(b) full disclosure of all facts within the registrant’s knowledge that affect or will affect the value of the real estate; and

(c) in the case of a transaction described in clause (1) (a), the particulars of any negotiation, offer or agreement by or on behalf of the registrant for the subsequent sale, lease, exchange or other disposition of an interest in the real estate to any other person. 

The Code

Disclosure of interest

18. (1) A registrant shall, at the earliest practicable opportunity and before any offer is made in respect of the acquisition or disposition of an interest in real estate, disclose in writing the following matters to every client represented by the registrant in respect of the acquisition or disposition:

1. Any property interest that the registrant has in the real estate.

2. Any property interest that a person related to the registrant has in the real estate, if the registrant knows or ought to know of the interest.

(2) A brokerage shall, at the earliest practicable opportunity and before any offer is made in respect of the acquisition or disposition of an interest in real estate, disclose in writing the matters referred to in paragraphs 1 and 2 of subsection (1) to every customer with whom the brokerage has entered into an agreement in respect of the acquisition or disposition.

(3) A broker or salesperson shall, at the earliest practicable opportunity and before any offer is made in respect of the acquisition or disposition of an interest in real estate, disclose in writing the matters referred to in paragraphs 1 and 2 of subsection (1) to every customer of the broker or salesperson with whom the brokerage that employs the broker or salesperson has entered into an agreement in respect of the acquisition or disposition.

(4) A registrant shall disclose in writing to a client, at the earliest practicable opportunity, any direct or indirect financial benefit that the registrant or a person related to the registrant may receive fromanother person in connection with services provided by the registrant to the client, including any commission or other remuneration that may be received from another person.

(5) A brokerage that has entered into an agreement with a buyer or seller that requires the buyer or seller to pay the brokerage a commission or other remuneration in respect of a trade in real estate shall not charge or collect any commission or other remuneration under another agreement entered into with another person in respect of the same trade unless,

(a) the brokerage discloses at the earliest practicable opportunity tothe other person, in writing, the terms of the agreement with the buyer or seller that require the payment of a commission or other remuneration; and

(b) the brokerage discloses at the earliest practicable opportunity tothe buyer or seller, in writing, the terms of the agreement with the other person that require the payment of a commission or other remuneration.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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