Saturday, October 4, 2014

Seller does not warrant the retrofit status of the ‘in-law" suite

What does that mean? I have been saying for years, many homes may have two or more kitchens. That does not make them legal basement apartments nor does a disclaimer that retrofit status need not apply. Need proof?

The Real Estate Council of Ontario (RECO), the body that licenses and governs real estate agents, is cracking down on representatives who advertise two-unit homes without making clear whether the second unit — usually a basement apartment — is legal.
Many agents typically use wording such as, “Agents and seller do not warrant legal retrofit status of in-law suite.” Descriptions like this could disappear in the wake of two recent decisions of RECO discipline panels.
Dan Plowman has been a successful real estate agent in Whitby, Ont. for 25 years. Last year, he listed a property, describing it as having “income potential” with “separate entrance/in-law suite.” The MLS listing for the property included the disclaimer that “we do not nor does the seller warrant the legal retrofit status of the ‘in-law suite’.”
That wording, however, did not appear on Internet listings, or on
Wording like this is common in the real estate industry and is generally understood to mean that the basement suite is not legal. In my experience, Plowman’s listing used wording that thousands of Ontario agents have used and continue to use.
In a RECO discipline hearing, Plowman faced charges of acting unprofessionally by including information in an MLS listing which was either false, inaccurate, misrepresentative or misleading to consumers.
It was alleged that he failed to take steps to verify the legal status of the basement suite so that the appropriate language could be used in the MLS listing and available to consumers.
In an agreed statement filed at his hearing in June, Plowman admitted that he breached several sections of the RECO Code of Ethics and was fined $5,000.
Clearly this was meant to cover the owner from potential liability.  The agent thought he did that properly, as you cannot use the income to qualify for your mortgage as the declared use on the offer is still Single family residential.

What do you think? Fair or deceptive?

1 comment:

  1. It appears that RECO now requires agents to confirm whether a basement apartment is legal — a complex taskthat involves determining whether the unit complies with zoning bylaws, fire code, building code, electrical safety requirements, and — in some municipalities — registration and licensing.
    The problem is that municipalities will not tell owners or agents whether basement units are legal. How, then, can RECO require agents to verify legality of those units?