Disclosures Flashcards
Introduction to Disclosures
Introduction to Disclosures
Discussing Disclosures with your Client
Discussing Disclosures with your Client
Mandatory disclosures do more than advise consumers about important facts
They also provide consumers an opportunity to make an informed decision about how to proceed with a transaction based on the information provided
While RESA outlines specific circumstances in which a disclosure is required
Any time you feel your client may benefit from information about a transaction or your role in it, it is always advisable to err on the side of caution and disclose that information early and often
Examples of the kind of circumstances when the disclosures must be made to clients
-before an agreement is entered into (interest in trade, remuneration)
-As soon as possible after you become aware of some fact (eg: latent defect, material information)
Disclosure Obligations
Disclosure Obligations
The importance of proper, timely disclosure cannot be overstressed!
The importance of proper, timely disclosure cannot be overstressed!
When no specific format is required
It is always prudent to get written documentation of the disclosure to verify that is was both made and also that the disclosure provided all the required information under RESA rules
Failing to make Mandatory Disclosures
Failing to make Mandatory Disclosures
If you fail to fulfil the various obligations in accordance with real estate services rules,
You run the risk of a complaint, being investigated and subsequent discipline you are found to have committed professional misconduct
Simple matra
A fully informed consumer is a better protected consumer
When in doubt,
Disclose, disclose, disclose
A late disclosure is better then
No disclosure at all
But you could still be subject to discipline
Disclosures that must be made on BCFSA Forms
Disclosures that must be made on BCFSA Forms
Disclosure of interest in trade
Is used any time a licensee or associate of the licensee directly, or indirectly acquires or disposes of real estate
Disposing of real estate
Includes both selling and leasing property
Indirect acquisition or disposition
Can occur when an associate of the licensee is purchasing, selling or leasing real estate and the licensee is providing real estate services to the associate
Associate in relation to a licensee means
a) in the case of an individual licensee
i) a spouse or family partner of the license
ii) A trust or estate in which the licensee, or a spouse or family partner of the licensee, has substantial beneficial interest or for which the licensee, spouse, or family partner serves as a trustee or in similar capacity
Etc…
Disclosure to seller of expected remuneration
Disclosure to seller of expected remuneration
It is important to review this information as they may have forgot the commission rate if it was months or weeks prior
Disclosure is most meaningful when given in context
This disclosure must be made on the BSFCA prescribed form, and must include information on every offer, and counteroffer from the buyer
This information includes:
-Amount being paid to your brokerage
-the amount being paid to the cooperating brokerage
-The amount being retained by your brokerage
-The amount of any remuneration you might receive or anticipate receiving other than commission paid by the client
Additionally, you are required to provide the dollar figure on the form
Not the percentage of the sale price that is often used in a service agreement
Dollar figure = more transparent
Disclosures that may be made in any written form
Disclosures that may be made in any written form
RESA defines remuneration as
Any form of remuneration, including any commission, fee, gain or reward, whether the remuneration is received, or is to be received, directly or indirectly
Remuneration includes
Commission payment, referral fees, gifts, discounts on future purchase or services, etc.
Before you client makes an offer to purchase,
You must disclose in writing the portion of the commission your cooperating brokerage expects to receive from the listing brokerage
Due to your fiduciary duties,
You have an obligation to disclose any remuneration received from someone other than the client
If you are dealing with an unrepresented party who gives you a gift
You have no requirement to disclose remuneration as yo do not act on behalf of that unrepresented party
A licensee must not accept remuneration from anyone other than his brokerage
That is why referral fees, bonuses, etc must always be paid to your brokerage and not to your directly
Remuneration from a party other than a client can be disclosed in the service agreement and in a record that is separate from the service agreement
Yo, word
The disclosure of remuneration cannot be made in a contract of purchase and sale
Because that is an agreement giving effect to a trade in real estate
Disclosure of Material Latent Defects
Disclosure of Material Latent Defects
The two types of defects
1) Patent defect
2) Latent Defect
Patent defects
Visible to the eye, or which are necessarily implied by something which is visible to the eye, and which the purchaser should have discovered by a reasonably careful inspection of the property
Examples of patent defects could include
-A mouldy wall due to leaking pipes
-Water stains on the ceiling
There is no obligation for you or your seller to disclose the existence of
patent defects
Material latent defects
Defined as a defect that cannot be discerned through a reasonable inspection of the property
Latent defects includes a defect that renders real estate
-Dangerous or potentially dangerous to the occupants
-Unfit for habitation
-Unfit for the purpose for which the party is acquiring it if
i) The part has made the purpose known to their licensee
ii) The licensee is otherwise aware of the purpose
A material latent defect additionally includes
-A defect that would involve great expense to remedy
-A circumstance that affects the real estate in respect of which a local government or local authority has given notice to the client or the licensee, indicating that the circumstance must or should be remedied
-A lack of municipal building permits and other permits respecting the real estate
A licensee representing a seller,
you must disclose in writing, to the buyer, all known material latent defects respecting the seller’s property, promptly and before any contract is entered into, if the defect is not already disclosed, in writing, by the seller
Caveat Emptor
Let the buyer beware
Due to Caveat Emptor, it is best
To have the property inspected by a qualified professional
What if the seller does not want to disclose the material latent defect
You must refuse to provide further trading services to the client
Disclosures that may be made in any form
Disclosures that may be made in any form
