Real Estate

Disclosure rules for conservation restricted properties

  • Last Updated:
  • Aug 20th, 2021 2:26 pm
[OP]
Newbie
Aug 17, 2018
26 posts
2 upvotes

Disclosure rules for conservation restricted properties

Are there any rules/regulations/ laws for the seller and listing agents to describe if the property is restricted by conservation or escarpment or any major utility pipelines?
Seems some properties are listed with buyer due diligence clause. At least, that makes sense and gives a signal for a study before buy. So, it is up to the buyer to decide in this case.

There are some properties, nothing was described, but they are 100% covered by conservation restrictions, which means any dwelling change or updates or new structures needs a geotechnical assessment and approval from conservation authorities. The only it can go to the city for further approval.

It seems so many buyers are buying without this awareness during this Covid crazy real estate market. They may realize this at a later date.
I believe it must be disclosed by the seller and agent. There must be rules to imply this to protect the buyers. Buyer agents must be providing this awareness to the buyers and make them consciously buy. But this is the second step, as the buyer agent's service responsibility. The first must be by the Seller and the Listing Brokerage.

What is RECO stands for mandating this type of disclosure?
Any thoughts and experiences in this?
16 replies
Deal Fanatic
Jul 3, 2011
6517 posts
3788 upvotes
Thornhill
Well unless it's a well kept secret it doesn't need to be disclosed but it is worthwhile to disclose you're on a conservation area. With major pipelines and utilities, if you know of those and they're not readily visible it is in your best interests to disclose since the agreement of purchase and sale can provide the buyer the ability to rescind for utilities and easements that are not minor in nature. Typically a buyer doesn't find out about the restrcitions until at least 2 weeks before closing.

As for escarpment well, it's a pretty massive piece of ridge with a geographical zone called the escarpment, If anyone doesn't know about it that's their fault. The only caution I would give you in the escarpment area is disclosing underground water issues as these can be significant depending on where in the above/below the ridge your property lies
[OP]
Newbie
Aug 17, 2018
26 posts
2 upvotes
licenced wrote: Well unless it's a well kept secret it doesn't need to be disclosed but it is worthwhile to disclose you're on a conservation area. With major pipelines and utilities, if you know of those and they're not readily visible it is in your best interests to disclose since the agreement of purchase and sale can provide the buyer the ability to rescind for utilities and easements that are not minor in nature. Typically a buyer doesn't find out about the restrcitions until at least 2 weeks before closing.

As for escarpment well, it's a pretty massive piece of ridge with a geographical zone called the escarpment, If anyone doesn't know about it that's their fault. The only caution I would give you in the escarpment area is disclosing underground water issues as these can be significant depending on where in the above/below the ridge your property lies
Thanks for the comments.
Four roles involve during the offer 1) Seller 2) Listing Agent 3) Buyer Agent 4) Buyer (Brokerage is also here)
There is a high possibility the Seller and Buyer may not be aware of RECO.
Also, any owner who owns a property for more than two decades most likely knew about any land restrictions. Some may have benefited from tax deductions as well.

The RECO rules strictly apply to the agents and brokerage:

Rule 1 – Ethical Behaviour – A member shall:

1) endeavor to protect and promote the best interests of the Member’s client.
4) render services, including giving advice and opinion, based upon the Member’s knowledge, training, qualifications, and expertise.

Rule 2 – Primary Duty to Client – A member shall endeavor to protect and promote the best interests of the Member’s Client. This primary obligation does not relieve the Member of the responsibility of dealing fairly, honestly, and with integrity with others involved in each transaction.

Rule 11 – Discovery of Facts – A member shall discover and verify the pertinent facts relating to the Property and Transaction relevant to the Member’s Client that a reasonably prudent Member would discover in order to fulfill the obligation to avoid error, misrepresentation or concealment of pertinent facts.

Rule 21 – Advertising – A member shall ensure that all advertising and promotion by or on behalf of the Member, including for Properties and services, is not false, misleading, or deceptive.

The major problem here is, the public not aware of RECO and is unable to demand what they deserve, rather panicking during COVD and giving firm offers. Many agents take this as an advantage. And so the sellers who own the restricted properties.

I tried to be coherent here. Looking forward to hearing more opinions and comments.
Deal Fanatic
Jul 3, 2011
6517 posts
3788 upvotes
Thornhill
Well, first things first. Neither seller nor agent is using covid to firm up offers. Sellers and agents have been taking advantage of the red hot market for at least 10 years now with the underpricing and holding back of offers. It is up to the buyer to not play the game and defeat that ploy. Don't get me wrong, I am well aware that the ploy is used to sell some very defective product, but it is buyer beware and that is how they demand what they deserve. The legal system at present favours no party, it only seems it favours the seller because it's their market, but in a buyer's market the complaints go the other way.

So, unless there is a material defect that is hidden or cannot be readily discovered by the buyer that may cause the property to be uninhabitable or unsafe, or pertinent to the buyer not placing an offer and so stated, it is incumbent upon both the seller and their agent to disclose this. There is no disclosure required otherwise.

So here's the thing, A buyer has to do certain due diligence. If they look out the back window and see trees and a mini forest or lush land spreading for acres, it is up to them to ask the right questions and document the answers because neither seller nor agent can lie or materially misrepresent. The discovery of facts is not one sided.

And while a seller's agent owes duty to their seller to not disclose that which they are not allowed to disclose - the duty to client - it is up to the buyer's agent who owes the same duty to their client so as to protect their client. Many people fail to recognize this and put all blame on the seller and seller's agent. However, if a listing says the property is 50 x 125, it is up to the buyer and agent to verify and if the listing says buyer to verify and its wrong, the agent is as laible as their seller. If the seller's hired inspector reports they couldn't get up onto the roof but it looked just hunky dorey from across the street with binoculars, or there is a working sump pump, it is up to the buyer to ask the obvious pertinent questions.

I noted in another thread that my clients had lost a property even though our offer was $10k more, but our offer also required the seller to represent they they never had any water seepage. They obviously couldn't do that and opted instead for the lower price and the under- represented buyer. Since the seller provided no inspection report and the time given for offers was insufficient to arrange one, losing the bid confirmed to my clients exactly what I told them it would mean me and what I showed them - that the property had a problem foundation. That's how a buyer protects themself in such an environment but truthfully many and their agents either have no clue how to do it or just don't want to ruin their chances. So instead, they end up with a money pit and a lawsuit.
SGHomCan wrote: Thanks for the comments.
Four roles involve during the offer 1) Seller 2) Listing Agent 3) Buyer Agent 4) Buyer (Brokerage is also here)
There is a high possibility the Seller and Buyer may not be aware of RECO.
Also, any owner who owns a property for more than two decades most likely knew about any land restrictions. Some may have benefited from tax deductions as well.

The RECO rules strictly apply to the agents and brokerage:

Rule 1 – Ethical Behaviour – A member shall:

1) endeavor to protect and promote the best interests of the Member’s client.
4) render services, including giving advice and opinion, based upon the Member’s knowledge, training, qualifications, and expertise.

Rule 2 – Primary Duty to Client – A member shall endeavor to protect and promote the best interests of the Member’s Client. This primary obligation does not relieve the Member of the responsibility of dealing fairly, honestly, and with integrity with others involved in each transaction.

Rule 11 – Discovery of Facts – A member shall discover and verify the pertinent facts relating to the Property and Transaction relevant to the Member’s Client that a reasonably prudent Member would discover in order to fulfill the obligation to avoid error, misrepresentation or concealment of pertinent facts.

Rule 21 – Advertising – A member shall ensure that all advertising and promotion by or on behalf of the Member, including for Properties and services, is not false, misleading, or deceptive.

The major problem here is, the public not aware of RECO and is unable to demand what they deserve, rather panicking during COVD and giving firm offers. Many agents take this as an advantage. And so the sellers who own the restricted properties.

I tried to be coherent here. Looking forward to hearing more opinions and comments.
Deal Fanatic
Jul 3, 2011
6517 posts
3788 upvotes
Thornhill
One other thing I just remembered. I showed an absolutely beautiful property by the Elora gorge earlier this year. Behind it was a paved path and parkland. The listing agent in the listing wrote that it was conservation area, even when I spoke with them on the phone pre-visit he stated it was conservaion and not going to be developed. Well, I believe no one but myself and so I checked and lo and behold, the Town had designated a huge swath of that land as limited restriction whereby it was already set aside for the development of a new sub-division which was to commence in 3 years.

That wasn't the first time I ran into this either. So my clients opted to not enter a bidding war knowing full well that one of the main features of the property was going to disappear amid a lot of noise, dust and diminished property value.
[OP]
Newbie
Aug 17, 2018
26 posts
2 upvotes
Thank you for the inputs and comments. You showed a very good discovery of facts efforts to your clients.

Sometimes in the past few properties were listed as single dwelling land in the conservation areas and found to be false lists by the agent. Complaints, where buyer reported, got enquired and RECO took action on the agents. However, this type of explicit impacts, then only a buyer goes and searches for solutions and learns about RECO. If there is a building already build before the conservation assignment, then there is no impact to the existing dwelling or reno within the footprint. In the past listing say something about this directly or indirectly. Recently, almost all conservation property listings are not saying anything, and buyers are making firm offers.
The rules I was mentioning about applies to both seller agent and buyer agent. For instance, if a listing agent says a tennis court or pool can be built on a conservation property, then this must be misleading or deceptive unless the agent checked and confirmed. Some land may get permission some not. This is one example of how some agents mislead the buyers.

The last time bidding was hot during 2017 in the specific areas of GTA only, more visible areas were Vaugh, York, and Markham. There are many properties bought in 2017, sold 20 to 30% over asking price, currently sold for 1 to 5% less than the 2017 price. This is impacts most home purchases made during this pandemic may expect to face down the line after the COVID crazy seller market is over. The current seller marker is not only because of the low interest rates, the primary reason is the people from condos flooded into the market as buyers. Nothing wrong, everyone has to be safe.
But, they shouldn't be panic this much about losing a house because there will more and more houses, particularly older houses, will come to market anyways.
[OP]
Newbie
Aug 17, 2018
26 posts
2 upvotes
An example case of overbidding and get into the issue at a later date.
A house in Driscoll Rd, Mill Pond - Richmond Hill
Listed for: $ 980,000
Sold for: $ 1,340,000
Sold in Apr 2017

Listed for: $ 1,288,000
Sold for: $ 1,279,000
Sold in Aug 2021

There are some houses bought early this year and listed again due to some financial issues or other reasons, were sold less than the price they bought this year.

Almost 50% of the purchases during this year may encounter this issue in a year or two when things change about COVID spread risks.
[OP]
Newbie
Aug 17, 2018
26 posts
2 upvotes
They paid the price over 2021 price Disappointed Face in the year 2017. There are many properties like that. This means the buyer got somehow tricked by the bidding war. How come people enter into bidding war crazy like this. There are some properties just two people were bidding and raised the property 200K more than the listing, which was not even listed as a teasing price for bidding.
On top of this, this is now happening in most of the rural properties around/near GTA. This is a clear symptom of COVID madness.
Deal Guru
User avatar
Mar 23, 2008
13006 posts
9961 upvotes
Edmonton
SGHomCan wrote: They paid the price over 2021 price Disappointed Face in the year 2017. There are many properties like that. This means the buyer got somehow tricked by the bidding war. How come people enter into bidding war crazy like this. There are some properties just two people were bidding and raised the property 200K more than the listing, which was not even listed as a teasing price for bidding.
On top of this, this is now happening in most of the rural properties around/near GTA. This is a clear symptom of COVID madness.
How come it feels like you're derailing your own thread? I'm not sure your attempt to remain coherent has been successful...

COVID has nothing to do with people paying stupid prices in 2017. Bidding wars obviously have been around much longer than COVID. People were having to do their own due diligence for many years as well. Basically, it's up to the buyer and their agent to determine if a property is suitable for their purposes.

C
Deal Fanatic
Dec 20, 2018
7258 posts
6428 upvotes
SGHomCan wrote: Are there any rules/regulations/ laws for the seller and listing agents to describe if the property is restricted by conservation or escarpment or any major utility pipelines?
Seems some properties are listed with buyer due diligence clause. At least, that makes sense and gives a signal for a study before buy. So, it is up to the buyer to decide in this case.

There are some properties, nothing was described, but they are 100% covered by conservation restrictions, which means any dwelling change or updates or new structures needs a geotechnical assessment and approval from conservation authorities. The only it can go to the city for further approval.

It seems so many buyers are buying without this awareness during this Covid crazy real estate market. They may realize this at a later date.
I believe it must be disclosed by the seller and agent. There must be rules to imply this to protect the buyers. Buyer agents must be providing this awareness to the buyers and make them consciously buy. But this is the second step, as the buyer agent's service responsibility. The first must be by the Seller and the Listing Brokerage.

What is RECO stands for mandating this type of disclosure?
Any thoughts and experiences in this?
nope, do your own due diligence. your lawyer should see any/all the encumbrances on title

what do you mean by conservation area? you mean like TRCA regulated area?
[OP]
Newbie
Aug 17, 2018
26 posts
2 upvotes
CNeufeld wrote: How come it feels like you're derailing your own thread? I'm not sure your attempt to remain coherent has been successful...

COVID has nothing to do with people paying stupid prices in 2017. Bidding wars obviously have been around much longer than COVID. People were having to do their own due diligence for many years as well. Basically, it's up to the buyer and their agent to determine if a property is suitable for their purposes.

C
I didn't mean the say 2017 was COVID. I should have added 2021 in my last sentence. I agree that bidding was here before for some specific properties in some specific area. However, it was not common across GTA. In 2021, it became the norm for 90% of the properties, with significant hike offers.
In the past, there were open houses, even some properties left the offer book to write the offers by the open house visitors. COVID helps real estate agents and Sellers a lot. The price hike between 2019, 2020, and 2021 is significant. Have you ever compare this type of price hike in history?

I used an example purchase from 2017 to compare with people buying in 2021, I believe there will be a shake on this bubble, and house prices will drop a certain percentage. Whoever sells in the few years they must be prepared to lose money.
There are examples of houses bought early in 2021, and they sold less than 10 to 50 K in summer. This is the effect I am trying to specify. This is different from the conservation and disclosure point.
[OP]
Newbie
Aug 17, 2018
26 posts
2 upvotes
StatsGuy wrote: nope, do your own due diligence. your lawyer should see any/all the encumbrances on title

what do you mean by conservation area? you mean like TRCA regulated area?
If a listing agent, try to sell a conservation property land with an advertisement stating multiple possibilities then for sure that person will be trouble There are examples for this. That's why if it is only land then they are very careful during the listing. If there is a house already built then they can say you can do tennis court, swimming pool, etc on the land, but that's not true as per the Conservation. If one buyer is bold enough to complain then only it is expected to change. We may expect these sooner in the coming years in GTA and the surrounding real estate market.

Without COVID there is no purpose for the majority number of people to run out of Condos and buy houses unless the family grew and more space is needed. I knew a couple near my area came from Toronro, bought a house 250K over asking. They said they wanted to leave the Condo sooner so bought this house.
Deal Guru
User avatar
Mar 23, 2008
13006 posts
9961 upvotes
Edmonton
SGHomCan wrote: I didn't mean the say 2017 was COVID. I should have added 2021 in my last sentence. I agree that bidding was here before for some specific properties in some specific area. However, it was not common across GTA. In 2021, it became the norm for 90% of the properties, with significant hike offers.
In the past, there were open houses, even some properties left the offer book to write the offers by the open house visitors. COVID helps real estate agents and Sellers a lot. The price hike between 2019, 2020, and 2021 is significant. Have you ever compare this type of price hike in history?

I used an example purchase from 2017 to compare with people buying in 2021, I believe there will be a shake on this bubble, and house prices will drop a certain percentage. Whoever sells in the few years they must be prepared to lose money.
There are examples of houses bought early in 2021, and they sold less than 10 to 50 K in summer. This is the effect I am trying to specify. This is different from the conservation and disclosure point.
That's MY point... you're wandering off topic, so no longer having a coherent thread.

And the GTA/GVR price waves are commonly known, and for more than the last 3 years. There's going to be peaks and valleys. And people buying for short-term gain risk getting caught short.

C
[OP]
Newbie
Aug 17, 2018
26 posts
2 upvotes
CNeufeld wrote: That's MY point... you're wandering off topic, so no longer having a coherent thread.

And the GTA/GVR price waves are commonly known, and for more than the last 3 years. There's going to be peaks and valleys. And people buying for short-term gain risk getting caught short.

C
Thank you for your inputs.
My intention was to connect the dots around the1) disclosures missing for conservation restricted home & land properties, 2) COVID market condition, 3) People making Firms offers without realizing disclosures, and they may get into trouble selling at a later date when the bubble settles.
My intention was not to discuss the GTA market in general, used a reference, that's all.

Message:

1) Overbidding and Firm offers are always expected to go against the buyer sooner or later.
2) Beware of disclosures when buying in the conservation zone.
3) Realizes something misled to buy a property then should attempt to make a complaint to RECO.

Nothing wrong with an attempt to make a complaint if the buyer feels affected by the wrong information. What is the point in RECO rules then?
[OP]
Newbie
Aug 17, 2018
26 posts
2 upvotes
Here is the content from the new papers:
-----------
Detached homes led the way in terms of price growth, driven by sales in the suburban regions surrounding Toronto as many gave up city living in a castle in the sky for working from home in the wide open greenspace of Toronto’s outer regions.

This time last year we were in the middle of the COVID-19 virus sans vaccines and an exodus of city dwellers to the GTA and rural communities, resulting in big dollar real estate battles as multiple offers drove home prices through the roof.

Multiple offers haven’t gone away, but for now the market continues both to stabilize and support ongoing strong demand.

“The annual rate of price growth has moderated since the early spring, but has remained in the double digits. This means that many households are still competing very hard to reach a deal on a home,” noted TRREB chief market analyst Jason Mercer.

“This strong upward pressure on home prices will be sustained in the absence of more supply, especially as we see a resurgence in population growth moving into 2022,” Mercer said.

--------

I referred to this article for people who argues there is no relevance of house prices and COVID.
Deal Addict
User avatar
Apr 12, 2013
2920 posts
1904 upvotes
Moon
SGHomCan wrote: An example case of overbidding and get into the issue at a later date.
A house in Driscoll Rd, Mill Pond - Richmond Hill
Listed for: $ 980,000
Sold for: $ 1,340,000
Sold in Apr 2017

Listed for: $ 1,288,000
Sold for: $ 1,279,000
Sold in Aug 2021

There are some houses bought early this year and listed again due to some financial issues or other reasons, were sold less than the price they bought this year.

Almost 50% of the purchases during this year may encounter this issue in a year or two when things change about COVID spread risks.
RHill really lagging behind Markham and Vaughan, they really need a "DT" to catch up. Once upon of time the region was a tier above it's neighbours.
Koodo, Public Mobile, Lucky Mobile Customer
[OP]
Newbie
Aug 17, 2018
26 posts
2 upvotes
Another example for the price fall within one year,

Buy/sell history for 55 St. Edmunds Dr, Toronto (Detached)
2021-07-20 2021-08-11 $2,600,000 Sold C5314080
2021-03-15 2021-03-23 $3,425,000 Sold C5152151

Listed for: $ 2,995,000
Sold for: $ 2,600,000
Sold in Aug 2021 for a loss.

Listed for: $ 2,995,000
Sold for: $ 3,425,000
Sold in Mar 2021 for over asking

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