Existing inspection report: What is the proper procedure for the real estate agent?
Notice to reader
Please note that the following article has not yet been updated since the coming into force of the new Real Estate Brokerage Act on May 1, 2010. The OACIQ positions which are conveyed in this article may have evolved since the date of its publication. It is your responsibility to ensure, at all times, that you are acting or that you are exercising your rights or recourse in accordance with the Real Estate Brokerage Act, its regulations or any other applicable law.
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Good professional practices dictate, among other things, that an agent should discover and disclose any unfavourable factor related to an immovable in order to inform the buyer. To do so, he must question the seller and inform him of his obligations.
Discovering and disclosing unfavourable factors
An agent must take steps to discover any unfavourable factor and, of course, inform the parties as soon as such factors are brought to his knowledge. The seller, for his part, has an obligation to disclose any factors that could be unfavourable to a buyer regarding the sale of his property.
Questioning and informing the seller
The agent must inform the seller of his ethical obligation to disclose any unfavourable factor. He must also ask him whether an inspection report has ever been written on the property and inform him of his civil obligations towards the buyer. Clause D13 of the form ''Declarations by the seller of the immovable'', entitled EXISTING INSPECTION OR OTHER EXPERT REPORTS, states the following:
To your knowledge, are there or have there ever been:
D13.1 one or more inspection reports written on the immovable? yes no
D13.2 any other test or expert evaluation done on the immovable (ex. pyrite, pyrotite, UFFI, asbestos, air quality, water quality and flow, foundation drain)? yes no
D13.3 Are these inspection reports, tests or expert evaluations available? yes no
Any unfavourable factors must be included in the ''Declarations by the seller of the immovable'' at the time the brokerage contract is signed.
Informing the buyer of any unfavourable factors
The agent must disclose to any potential buyer any unfavourable factors mentioned in the brokerage contract, an inspection report or a ''Declarations by the seller of the immovable'' form. These factors must also be declared in writing in any promise to purchase, for instance by annexing the ''Declarations by the seller of the immovable'' form on which they are clearly stated.
Does the agent have an obligation to provide a copy of the inspection report?
Although the agent is not obligated to give the inspection report to the buyer or to annex it to a promise to purchase, this practice is recommended by the ACAIQ. An agent who decides which elements of the report should or shouldn’t be disclosed runs the risk of not reporting a factor which could be unfavourable. And even if all the factors are mentioned by the agent, transcribing them could lead to errors. The buyer, with the advice of his own inspector, is in the best position to evaluate the content of an existing report. However, the listing agent cannot give the report if the seller refuses. A collaborating agent who receives a copy of the report cannot interpret it and must give it to the buyer.
Always recommend an inspection to the buyer
Disclosing to a buyer the unfavourable factors contained in an inspection report does not release the agent from his obligation to recommend that the buyer require his own inspection as part of his promise to purchase.
If conclusions contained in an existing report reveal unfavourable factors which appear unfounded in whole or in part, the agent may recommend that the seller have another inspection report prepared to give to the buyer when these factors are disclosed. The agent may also recommend that the seller obtain written quotes to evaluate the cost of fixing the problems identified.