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Stouffville Fire

FREQUENTLY ASKED QUESTIONS FOR REALTORS® ABOUT:

GROW OPS AND OTHER STIGMATIZED PROPERTY LISTINGS AND DISCLOSURES, DUTY TO DISCLOSE TO BUYERS

1) As a listing agent, am I required to disclose to a customer buyer that a property housed a grow op?

Under the common law, the disclosure obligations of a listing agent are the same as those of the seller. If the seller is required to disclose, so too is the agent. Sellers (and therefore listing agents) are obligated to disclose that a property was a grow op when:

1. There is an actual material latent defect of which the vendor knows or ought to know, or;
2. The buyer asks a specific question or expresses a specific concern, or;
3. The agreement of purchase and sale contains representations that the property was not used as a grow op or for criminal activities, or;
4. There is some statutory or regulatory requirement that this disclosure be made.

If none of the above criteria are met, there is likely no obligation to disclose the fact that the Property was a grow op.

Note: however, that provincial regulations and Codes of Ethics may impose a higher obligation of disclosure on a REALTOR®. Under these circumstances, it is important that the listing agent clearly explain to the sellers that while they may have no legal obligation to disclose, the listing agent does have such an obligation.

2) As a buyer agent, am I required to disclose to my buyer client that a property has been used as a grow op?

Yes. There is absolutely no question that you are responsible for making such a disclosure to a client. If you are a buyer agent and the property the buyer is looking at was, to your knowledge, used as a grow op, you have an absolute obligation to disclose that fact in accordance with your duty of full disclosure which is owed by any agent to a client. In fact, as part of your obligations as a buyer agent, you should take reasonable steps to ensure that the property has not been used as a grow op.

3) As a dual agent, do I have an obligation to disclose to my client buyer that my listing is or was a grow op?

Yes. If you are representing both the buyer and the seller as dual agent, you have an agency obligation to disclose all pertinent information to both parties. In this case, you must disclose to the buyer that the property has been used as a grow op. As the seller may have no such obligation in law, it is extremely important that sellers be made aware of this obligation before they agree to the dual agency.

4) As a buyer agent, how do I protect my buyer from inadvertently purchasing a property y that was once used as a grow op?

A buyer agent should be aware that there may be no obligation on the part of sellers to voluntarily disclose that the property has been used as a grow op. Recognizing this fact, the buyer agent should be proactive in protecting the buyer by:
a) Specifically inquiring of the listing agent or seller as to whether the property has been used as a grow op or for other criminal activities. (Use the clause in the offer if needed)
b) Specifically inquiring as to whether the sellers have knowledge of any defects — latent or patent.
c) Ensuring that the agreement of purchase and sale contains a representation on the part of the sellers that the property has not been used as a grow op or for criminal activities.
d) Recommending to their buyer that a building inspection be done.

5) How do I disclose the information?

There is no standard or requirement for disclosure. The disclosure can be made orally. However, given the nature of the problem with grow ops; REALTORS® are encouraged to act in an extremely cautious manner by having disclosure documented. If a listing agent is actually going to indicate on the data input sheet that the property housed a grow op, he or she should first satisfy himself that this disclosure is required by law or regulation and should obtain consent for that disclosure from the seller. Otherwise, any disclosure required by law should be made before any agreement of purchase and sale is signed.

6) What are the legal consequences of selling a home without disclosing that it was once used as a grow op?

It may be that there is no obligation to disclose that the property was a grow op. That is the first area of inquiry a REALTOR® must undertake. There is, however, always an obligation to disclose material latent defects that are known or should be known by the seller. Both the seller and the listing REALTOR® (if they knew or ought to have known) could be liable for damages to the buyer for the costs of any necessary repairs to make the property fit for habitation. It must also be remembered that the standard of care imposed on real estate practitioners requires them to confirm information when the circumstances dictate. In some situations, REALTORS® may not be able to simply take the seller’s word for the status of defects, and may be required to investigate further.

7) Should the address of a known former grow op be published by either the REALTOR or the Board?

No. Property addresses, in so far as they can be linked to a name, are personal information. Due to the ease of linking addresses to names, an address should generally be treated as an item of personal information. CREA‘s Privacy Code provides that personal information cannot be collected, used or disclosed without the consent of the owner of that information. Therefore, it would, in all likelihood, be inappropriate for real estate boards to be distributing this information. Furthermore, if grow op disclosure itself is not necessarily required by law, publishing addresses is unauthorized disclosure. Boards could be opening themselves up to litigation as a result of distributing this information.

8) Do grow ops lower the property value of neighboring houses?

This is a difficult question to answer with any degree of certainty. The question is whether or not a grow op constitutes a “stigma” which devalues the neighboring property. Grow ops do not devalue the property any more than any other house which was used for criminal activity. It does not appear that this is the type of stigma that would have any substantial effect on neighboring property. However, only time will tell.

Article for Public Awareness from:

http://www.crea.ca/sites/default/files/grow_ops__what_realtors_need_to_know_-_revised.pdf

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