Third Party Disclosure of Material Facts


Now, we actually come to a breach of an agent’s fiduciary duties to their own client.

Previously, under the old Code of Ethics, there was no such provision.

Now, have a look at this:

“Disclosure of facts by seller’s broker or salesperson

22.2 (1) If a seller has a legal obligation to disclose a fact to the buyer and the fact is known to the broker or salesperson who represents the seller, the broker or salesperson shall disclose the fact to every buyer who expresses an interest in the real estate. O. Reg. 357/22, s. 12.

(2) The registrant shall make best efforts to obtain a written acknowledgement from each buyer who receives the disclosure under subsection (1) indicating that the disclosure has been received and, if a buyer makes the acknowledgement, provide them with a copy of it. O. Reg. 357/22, s. 12.”


Under the existing law, caveat emptor prevails and the agent’s primary duty is to their own client. They are prevented from “telling a lie” or “engaging in a misrepresentation”.

Now, there’s a brand new positive duty to convey information to another party.

Sellers have an obligation to disclose certain latent defects (but not all of them).

If the agent concludes that the Seller has such an obligation, and is not disclosing, then, the agent is to step up to the plate and advise the Buyer. This was never the case before! But, it is now.

For example, the Seller treated his house for termites. That’s all completed. It’s finished. The Seller could simply take the position that they are not going to make this disclosure. Their own agent would have had to strictly follow their instructions. I have decided not to tell and you are to follow my instructions, so, you too, are not to tell. This is a secret. No lies, no misrepresentations! This is a matter which is up to the Buyer’s agent to find out.

However, that was the old law.

The new Code obligates the real estate agent to disclose this information to prospective Buyers. They don’t have to wait for their own agent to figure this out, they can now rely upon the obligation of the Seller’s agent to tell them.

The new Code sets out:

  • If a seller has a legal obligation to disclose a fact
  • the fact is known to the seller’s agent
  • the agent shall disclose the fact
  • to every buyer who expresses an interest in the real estate. 

This is the case, now, even if the Seller says “keep it secret”.

Further, the agent is to obtain an written Acknowledgement from each buyer confirming receipt of such disclosure.

That means, the disclosure is to be made ahead of time to “every buyer who expresses an interest in the real estate”, not just the actual Buyer in an Agreement of Purchase and Sale. So, if it’s bad news, then, it will drive the price down. No such thing as secrets anymore, and so long to caveat emptor!

Brian Madigan LL.B., Broker

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