TRESA: Facts a seller has a legal obligation to disclose

RECO explaining TRESA sets out the following:

“Under TRESA, a new obligation is introduced that requires a registrant representing a seller to disclose facts to a potential buyer, if those facts are known to the registrant and they are facts that a seller client is legally required to disclose. These are facts that would make a property uninhabitable, dangerous or potentially dangerous.”

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. 

(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. 

Disclosures, etc.

2.2 (1) A disclosure, consent or acknowledgement required by the Act or the regulations shall be,

(a)  written in plain language that is clear and concise; and

(b)  presented in a manner that brings 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” and provided to the recipient in writing. 

(3) This section does not apply to,

(a)  a disclosure that a registrant is required to make to the registrar; or

(b)  a disclosure that a broker or salesperson is required to make to a brokerage

COMMENTS

So, here’s what the provision says:

“If a seller has a legal obligation to disclose a fact to the buyer and ….”

When is this? First, the Seller MUST already have a legal obligation. That means that there is no legal obligation to disclose patent defects, that is, those that are observable.

Latent defects, that means the ones which cannot be easily discovered and are hidden from view are the only ones that qualify.

However, there are two steps here. They MUST be KNOWN to the Seller, and they must: 1) render the premises structurally unsafe, or 2) render the premises uninhabitable. That is the test of “materiality”.

the fact is known to the broker or salesperson who represents the seller,

Point 1, was KNOWN to the Seller. Point 2, is KNOWN to the agent.

the broker or salesperson shall disclose the fact

This is an obligation under TRESA.

to every buyer who expresses an interest in the real estate. 

So, just who is a buyer? And, when did they “express an interest”? This falls short of submitting an Offer or expressing an intention to submit an Offer.

Obviously, some agents will disclose very early, right in the Listing on MLS. Others will choose to wait and place it in a brochure at an Open House. Others will send it at the time a showing is requested. Others will wait until after the showing has been completed. Others might include a reference “Call Listing agent before submitting Offer”.

Others might wait until Offer registration. So, we have another use for an 801. This could actually turn out to be the “late” request for disclosure under TRESA.

Next Step

The Listing agent is to get an Acknowledgement signed by the Buyer, confirming that they have the “disclosure”. And, then, the Buyer is to receive a copy of their Acknowledgement.

The Document(s)

The document(s) are currently being drafted by OREA.

The Titles should be placed at the top of the page:

1. Disclosure,
2. Consent,
3. Acknowledgement.

The documents should be written:

1. In plain language,
2. Clear, and
3. Concise;

It must also be presented so that it brings to the recipient’s attention the information that is required to be conveyed. 

A Listing agent will need to know the law of Disclosure before they embark upon this process.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com