RECO: Disclosure Former Grow-op

Does my salesperson have to tell potential buyers that my home is a former grow-op?

RECO Press Release: March 25, 2017

“There are two separate issues to deal with when you’re selling a former grow-op: physical damage and/or repairs to the property, and the potential emotional stigma as a result of the home’s past.

An important principle in real estate holds that buyers are responsible for figuring out whether the property they are purchasing is suitable for them, with the help of their broker or salesperson. To do this, buyers may ask for more information and conduct independent research.

Under that principle, you don’t have to disclose physical issues with the property that can be found through a typical home inspection. But if you know there’s a physical defect that would only be revealed with an invasive inspection, and the defect makes the home uninhabitable or dangerous to health and safety, you need to disclose it.

As with physical defects, you don’t have to disclose a potential stigma to a prospective buyer. But remember that a potential buyer will decide what’s important and instruct their representatives accordingly — and they may ask.

What is considered a stigma can vary from person to person. For example, was the home the site of a murder or suicide? Did a notorious criminal once reside in the home? The subject of stigmatized properties must be approached carefully.

Work with your agent to come up with a game plan to deal with any questions from a potential buyer or their representative.

Although your sales rep does not have to volunteer information about physical issues or stigmas, they can’t lie when they are asked about it. They can either answer the question directly, or decline to answer the question and suggest that the buyer’s representative conduct their own research.

All real-estate professionals have an obligation under the Code of Ethics to act with fairness, honesty and integrity when dealing with others in a real-estate transaction. It is also their duty to promote and protect your best interests.

Similarly, your sales rep must avoid misrepresentation or error when promoting your property. In dealing with an area of uncertainty about whether disclosure is advisable, their advice may be to disclose to avoid potential problems later on. It can be a difficult balance but make sure you have done what you can to make an informed decision.

There’s an additional wrinkle if your broker or salesperson is also representing any potential buyers (known as multiple representation). In this case, your representative has to take reasonable steps to discover and disclose to their buyer client anything that could reasonably affect their decision to buy.

As a seller, you are within your right to sell a property for as much as you can. If you are worried that this stigma may affect the sale of your home, consider seeking guidance from a lawyer.

And for all the buyers out there: before you make an offer on a property, make sure it suits your needs. Work with your real-estate professional to ask the right questions, and do your research.”


Interesting but risky!

Brian Madigan LL.B., Broker

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