Theory of Relativity for Real Estate (Part 1: Who’s Included)

A question that pops up frequently in real estate is the matter of disclosure when a real estate agent acts for a relative.

Let’s consider a simple case. Bob is a real estate agent and he acts for his nephew Bill who is looking to buy a condo in downtown Toronto. Martha is a listing agent and has a Mary’s condo available.

It’s important to note that Bob is not buying the condo with Bill. He is not loaning Bill any money. Bob is strictly acting as the real estate agent for Bill.

Is any kind of disclosure required here?

Who is a close Relative?

The entire matter of who is a “related party” under the Real Estate and Business Brokers Act, 2002 is set out in the Code of Ethics passed pursuant to the Act, {See s. 1 (2) and (3)}

Here is the scheme:

· Lineal Descendants are included

· Lineal Ascendants are included

· Collaterals are included only to the first degree (brothers and sisters)

A is related to B if:

B is

earlier ascendant (ie. Great-grandparent)
Grandchild or other descendant

…………..of A

Additional rules:

Adoption counts
Marriage counts
Conjugal relationship counts
Associated counts (controlled corporations)

So, spouses are “in”.

Now, one thing that is very interesting here is that uncles, aunts, nephews, nieces and cousins don’t count. For anyone who remembers the old rules, they were included. This new approach seems somewhat strange, but it’s been the law since 31 March 2006, therefore it would be time to learn the rules.

That was the “theory of relativity for real estate” in Ontario.

In this case, Bob is not under an obligation to disclose since Bill is not a “close enough” relative.

Brian Madigan LL.B., Broker

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