Does a realtor have a responsibility to tell me everything about a house?

If a realtor has knowledge of an event or stigma associated with the house, such as a death or illegal substances grown in the home, for example, they must disclose the information. All real estate sales agents/realtors are governed under the Real Estate Council of Ontario (RECO) and are regulated by the Ontario Real Estate Association (OREA). With that governance, all realtors in Ontario have an ethical obligation to disclose the existence of stigmas concerning the home such as a murder, suicide, drug lab, brothel, death by natural causes or even paranormal activity. They are obligated to tell you the buyer before you put in your offer. However, in many instances, a realtor may not know the home’s history.

Is the seller required by law to share information?

Simply put, if a seller and their agent are asked a question about the property, they cannot give a false answer…it’s unethical. In fact, when listing their home, sellers complete a Seller Property Information Statement (SPIS) which details defects and concerns about the home, including any renovations, big repairs, and so on. They are trusted to complete this ‘to the best of their knowledge’. However, as of yet, there is no formal law in Ontario that states a seller must disclose information like a violent crime that has occurred on their property. Without an actual law in place, the responsibility rests on the buyer and realtor to ask as many questions as possible. The saying, ‘buyer beware’ really rings true and you’ll want to do as much research as you can on the property so you have peace of mind as the new owner.

What about grow-ops?

The police maintain a list of marijuana grow operations they have discovered in Ontario, but of course not all operations get discovered and documented. It is completely up to the seller to disclose if they knew their property was a grow op previously and report any existing defects that might have resulted from this past use. If it is shared with you that such activity has occurred on the property, you may ask for proof that the defect was fixed or will be fixed from the local health or building authorities. Again, if the buyer asks the question, the seller is obligated to answer truthfully.

Can the seller record my comments when I’m at an open house?

In more recent years, sellers have been known to set up hidden cameras and recording devices in various parts of their home. They want to hear what potential buyers are saying to be able to use that information to their benefit, by leveraging it when it comes to negotiations. The dark side to this is that if people touring the home talk about personal financial details, like how much they are willing to offer, that can allow sellers to use that to their advantage.

Canadian laws are fairly clear when it comes to privacy boundaries, but it has created a bit of a grey area in the real estate business. The legislation states that a person cannot intentionally record or listen to a private conversation using a range of devices. If a seller does use the conversations to their advantage and they are found out, the law says it can result in jail time.  

On the flip side, if a seller has disclosed they are recording the home visit or open house, it is completely legal. This is something that all potential buyers should be made aware of and be very cautious about in their conversations while touring homes. As a buyer, it’s best to save your impressions about the home for the privacy of your own vehicle or away from the property.

These are just a few factors to consider regarding disclosure issues when working with your realtor. Buying a home is a complicated process; there’s a lot to know and understand. For that reason, it’s advisable to work with an experienced real estate lawyer to make sure everything is valid, thoroughly researched and above board. At Ares Law, we specialize in helping clients in Bracebridge, Huntsville, Gravenhurst and the greater Muskoka region to ensure their property purchase runs smoothly and all legal bases are covered. Connect with us today at (705) 645–8743 and see how we can help.

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Whether you are moving to Muskoka, within Muskoka, buying a cottage, or thinking of buying your very first home, there are a few things you need to cross off your to-do list to ensure that you are prepared when the time comes to make an offer. These include:

1.Make sure you have your finances in order and use a budget

For first-time homebuyers in particular (and everyone in general), you need to make sure your finances are in order before you decide to buy. Owning a home is a big financial responsibility, so it makes good sense to get your debt under control and have a budget in place that you can stick to before making the home-ownership leap.

2. Get pre-approved

Getting pre-approved for a mortgage before house-hunting officially starts is also a great idea. By getting pre-approved, you’ll have a solid understanding of how much house you will be able to afford, as well as make a good impression on sellers and realtors because they know you mean business when it comes time to putting in an offer.

3. Create a must-have list

Wish lists are great, but it’s also necessary to be clear about your non-negotiables when it comes to your new home. Before you start really looking, create a list of things that your new home must have. This could include things like a fenced yard for the dog, enough bedrooms for your kids or enough space for your growing family. Whatever your requirements, being clear about them before your search commences will help you narrow down your list of potential properties and find the right one faster.

4. Find a great real estate agent

Once you know what you want in a home (and what you definitely do not), it’s time to connect with a real estate agent in your area. Working with a local agent is key to finding the right home, as your agent will have the experience and knowledge of the area to guide you in the right direction. When searching for an agent, look for someone you can establish rapport and trust with. You’ll also want to find someone with quite a bit of experience working in this area and working in the real estate industry in general.

5. Connect with a real estate lawyer

A real estate agent is not the only professional you’ll want to add to your team when looking for your new home. You’ll also want to connect with a real estate lawyer prior to making an offer on a new property. Real estate lawyers work with their clients to provide legal guidance throughout the home buying journey and will ensure that all documents, land titles, land transfers, and agreements are ‘air-tight’.

At Ares Law, we specialize in providing real estate legal services to clients in Bracebridge, Gravenhurst, Huntsville, Port Carling and surrounding areas in Muskoka. Connect with our team and we’ll help ensure that your home buying journey is smooth and stress-free. Give us a call today at 705-645-8743.

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Additional home purchase expenses

1. Property valuation fee. This is the fee you pay to determine the value of your home – for lending purposes. This value may or may not be the same as the purchase price of the house or property, but it’s usually close. This is not the same as your municipal assessment, which determines how much property tax you will pay to your municipality.
2. Home inspection fees. These are not mandatory (especially for new homes) but frankly, inspection fees are a must for re-sale homes and older homes. A home inspection is often a condition in the Agreement of Purchase and Sale, and can give you peace of mind that you aren’t buying a home with serious and costly problems.
3. Property survey. A survey is done to outline the exact boundaries and measurements of the property and outbuildings. It also includes things like the driveways, fences, and sheds so you know if there are any encroachment issues.
4. Land transfer tax. In Ontario, you are charged this tax each time a property changes hands, and it is based on the purchase price. You can expect to pay between 1% and 2% of the selling price towards land transfer taxes. If you are a first-time homebuyer, you may be eligible for a refund for all or part of this amount.
5. HST/GST. This one can be a whopper if you aren’t properly notified about it. It usually applies to new homes or cottages and can be quite complicated, as it involves various formulae, exemptions and rebates depending on your particular situation. Sometimes it’s included in the purchase price (and your mortgage), or it can be a cost you pay on top of the purchase price. It’s important to always ask about this and other fees before signing any offers.
6. Mortgage loan insurance. If your down payment is less than 20% of the purchase price, your lender will require you to pay for insurance on your mortgage amount (usually through CMHC). This can be added to the principal amount of your mortgage, which means you will pay interest on it, or you can pay for it up front. If you have a down payment of 20% or more, you don’t need mortgage loan insurance.
7. Interest adjustments. Although this isn’t often a very costly expense, it definitely adds up. This fee is to cover the interest for the gap in time between your closing date and your first mortgage payment date. You can avoid this interest adjustment altogether if you arrange to make your first mortgage payment within one payment period of your closing date. Be sure to talk to your lender, real estate lawyer, or other qualified professional about this issue.
8. Prepaid property tax and utility adjustments. It’s quite common for homeowners to pay in advance for property taxes and utilities. When a home sells, this all gets sorted out so that you, the buyer, reimburse the seller only for amounts they would have paid for after your closing date. It wouldn’t be fair for them to pay these costs on a home they no longer own.
9. Home insurance. You’ll need to pay for insurance protection for your home and contents, as well as liability if anyone is injured while on your property. Coverage can vary widely, so be sure to shop around, research carefully, and know exactly what you are covered for.
10. Mortgage life insurance. This is not a mandatory item, and it’s not the same as mortgage loan insurance (see above). What this insurance does is cover the cost of your mortgage (or a portion of it) in the event that you or your spouse dies unexpectedly.
11. Title insurance. This is also an optional item, but can be useful in cases where you would want to have coverage for problems such as existing liens against the title of your property, title fraud, encroachment (such as your shed that’s actually on your neighbour’s property and needs to be removed), and so on. However, a thorough title search, survey, and the work of a good real estate law team would likely make this an unnecessary expense.
12. Legal fees. Your real estate lawyer does so much to protect you and your investment, and always has your best interests in mind. Working with a real estate lawyer will help you understand all aspects of your home purchase or sale and ensure that there are no surprises when it comes to the various costs involved.
13. Miscellaneous fees. These are likely the costs you’ve anticipated, such as moving costs, home décor purchases, and general upgrades or renovations for your new home.

Now that you know…

Although you may be a little overwhelmed with the additional costs of buying a home or cottage, you are now armed with lots of information so that you can prepare, save, and budget appropriately. When you work with qualified professionals such as your realtor, lender, and real estate lawyer, it helps make the process of buying or selling your next home run much more smoothly.

As lawyers specializing in real estate law in Bracebridge and Muskoka, our understanding of the complexities that come with buying home or cottage allow us to help our clients enjoy an informed, hassle-free experience. We can also talk to you about any refunds or rebates you may be eligible for, as well as walk you through every step of the process. If you’re looking to buy or sell, call on us at Ares Law at 705-645-8743 to book an appointment. We look forward to working with you.

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