REIX: Real Estate Insurance Exchange - Alberta, Saskatchewan

We’re a non-profit organization which means that premiums are used to pay the costs of defending claims and surplus funds are used to keep premiums low.

Disclosure: Property Condition

by

Ensuring Transparency in Real Estate Transactions

 

When it comes to buying or selling a property, transparency is crucial.  Courts have found that both sellers and agents have a responsibility to disclose any relevant information about the property’s condition. 

 

It is important to educate sellers about the risks associated with not disclosing relevant information about the property’s condition. 

 

Failure to disclose can lead to lawsuits and financial consequences down the line. By being transparent, sellers and their agents can avoid potential legal issues.

 

When buyers have a complete understanding of what they are investing in, they are making an informed decision.  This protects against a buyer suing their agent when they become aware of an issue they feel should have been disclosed.

 

Material Latent Defects

Sellers should disclose any material latent defects, which are hidden flaws or issues that may not be easily visible or known to the buyer but give rise to an argument that the property value is impacted by them. Past issues or claims related to the property should be disclosed, regardless of whether they have been resolved or remediated. This includes previous insurance claims, repairs, or renovations. 

 

REIX is currently managing a lawsuit that involves failure to disclose a previous insurance claim arising from plumbing issues.   The amount claimed is well over $100,000.  This lawsuit could have been avoided by transparency. 

 

If any information is disclosed in the private remarks section of the MLS listing / feature sheet, it is crucial to ensure that the buyer(s) are aware of these remarks before waiving any conditions. 

It is also important to note that silence is actionable. If you are aware of a defect or issue with the property and choose not to disclose it because the agent/buyer(s) on the other side never asked the question, you may still find yourself in a world of legal trouble. The same goes for any unlawful instructions your seller client gives to you. It is important to have these conversations with your sellers and disclose information and defects.

 

Local Regulations and Forms

In Saskatchewan, sellers are required to complete a Property Condition Disclosure Statement. This form is provided to a seller to fill out and list any previous issues, defects, or important disclosures that need to be made with respect to the property. Having sellers fill out this form is not only a great way to ensure that they have disclosed any pertinent information, but also provides as evidence in the event a party claims an issue was not disclosed. Having sellers fill out and sign this form also prompts the conversation of disclosure and can aid in warning them about the risks of failing to disclose.

 

Don’t Assume

Sellers should not assume that certain issues are “common knowledge” and therefore do not need to be disclosed. Even if an issue seems obvious or well-known, it is still important to include it in the disclosure. This helps avoid any potential misunderstandings or disputes in the future. 

 

Case example:  REIX resolved a lawsuit that involved our insureds who were sued by out-of-town buyers who purchased property not knowing major changes were planned to a nearby thoroughfare.   While it may have been common knowledge to a lot of potential buyers, it was not in this case and should have been disclosed.

 

Follow-Up in Writing

After any discourse conversation regarding property condition, it is advisable to follow up with a confirming email. This email should outline the date, time, and details of the disclosure conversation, as well as any instructions given. This documentation serves as evidence of the disclosure and ensures clarity for all parties involved.

 

If an agent receives a question from the other side of a deal and they are unsure of the answer, it is crucial to consult with their client.  After confirming this with the client, provide written clarification to the other agent.  This help maintain accurate and reliable communication between all parties and avoid future lawsuits.

 

If something needs to be disclosed after completing the initial disclosure form, it should be done through an addendum. This addendum should clearly state that “the buyer is aware that the seller has disclosed…” [the additional information]. This ensures that all parties are aware of any updates or changes in the property’s condition.

 

In conclusion, property condition disclosure plays a vital role in real estate transactions. It promotes transparency, protects buyers, and helps sellers fulfill their legal obligations. 

 

By following these tips and ensuring open communication throughout the process, both sellers and agents can create a trustworthy environment that benefits everyone involved.

 

Remember, when it comes to property condition disclosure, honesty is always the best policy!

 

Thank you, 

REIX

Multi-Factor Authentication on your business email account

If you already need a separate passcode (e.g. a code texted to your cell phone) to access your email  for the first time on a new device, or to view it on the web, then you already have this.

This will close in 0 seconds

Weekly backups for your business computer systems

Your computer systems, such as your PC and your phone, contain mission-critical data on them – regular backups are a simple and effective way to ensure disruptions to you and your clients are minimized in the event disaster strikes.

This will close in 0 seconds

Firewalls on your internet access

Almost all internet connections have a firewall built in to prevent people from freely accessing your home or business network, or worse, your computer’s files.  You most likely already have this in place, but we encourage you to familiarize yourself with the key piece of security equipment.

This will close in 0 seconds

Endpoint Protection (a.k.a. anti-virus)

An up-to-date endpoint protection software is key to keeping your PC safe from viruses – it’s simple to install and may already have it included free with your computer (e.g. Windows Defender). It scans files, emails, and more to make sure nasty viruses and code to infect your PC.

This will close in 0 seconds

Security and Privacy Liability

Provides coverage, including legal expenses and damages, for any claim made against you for any actual or alleged breach of privacy, damage to the computers or systems others, unauthorized disclosure of data, and more, arising out of your professional services.

This will close in 0 seconds

Data Recovery and Loss of Business Income

a) Pays for the expenses related to investigate, repair, and manage a cyber event, including but not limited to: damage and interruption by a computer virus or malicious code, accidental damage or destruction of data, and malfunctions.

b) Reimburses you for lost income as a result of a cyber event – subject to an 8 hour waiting period.

This will close in 0 seconds

Event Management Expenses

Covers the costs associated with a breach of your systems to ensure you meet the requisite privacy legislation requirements – including notification costs as well as credit monitoring and other support for affected clients.

This will close in 0 seconds

Data Extortion

Provides services and coverage for expenses related to cyber extorsion threats (e.g. ransomware) – including the costs to manage the event and, where necessary, pay the ransom.

This will close in 0 seconds

Social Engineering Fraud

This is coverage for your clients – it covers them for lost deductibles as a result of somebody using your identity and business relationship as part of a real estate deal to convince them to send their deposit to the wrong place.

This will close in 0 seconds

Security and Privacy Liability

Covers legal expenses and damages for any claim made against you for breach of privacy, damage to the computers or systems of others, unauthorized disclosure of data, and more, arising out of your professional services.

This will close in 0 seconds

Data Recovery and Loss of Business Income

Pays for expenses related to investigating, repairing, and managing a cyber event, and reimburses you for the income lost due to the event.

This will close in 0 seconds

Incident (Event) Management Expenses

Covers costs associated with ensuring you meet the requisite privacy legislation requirements post-incident — including notification costs, credit monitoring, and other support for affected clients.

This will close in 0 seconds

Data Extortion

Provides services and coverage for expenses related to cyber extortion threats (e.g. ransomware) — including costs to manage the event and if necessary, pay the ransom.

This will close in 0 seconds

Social Engineering Fraud

Covers the actions of third parties who fraudulently cause the diversion of deposit funds from a real estate trade.

This will close in 0 seconds

Multi-Factor Authentication (MFA):

Multi-step account login process that requires users to enter more information than just a password, like a code sent to their email or phone.

This will close in 0 seconds

Weekly Backup:

Copies your files to a safe secondary location for preservation in case of equipment failure or cyber incident.

This will close in 0 seconds

Firewall:

Network security device that monitors traffic to or from your network to prevent people from freely accessing your home or business network, or worse, your computer’s files.

This will close in 0 seconds

Endpoint protection (anti-virus):

Endpoint security system scans files, emails, and more to protect against viruses, malicious code, and other cybersecurity threats on your desktop, laptop, and mobile devices.

This will close in 0 seconds