WE NEED AN OPEN, COMPREHENSIVE GROW-OP LIST

Two weeks ago in this column, I asked whether listing agents should
be required to disclose that a home was, or might have been, a
marijuana grow operation, or whether they should disclose only if the
seller tells them it was a grow-op?

Would the public interest be better served, if the Real Estate
Council of Ontario (RECO) amended its rules to require disclosure of
all material facts about a property that the agent is or should be
aware of that could affect a buyer's decision? I raised the questions
after I was asked by two clients whether the house they considered
buying had been a grow-op. The listing agent was silent on the issue
and declined to answer questions on the subject.

I was swamped with emails from agents, homeowners and fellow lawyers.
Nearly all came down strongly on the side of mandatory disclosure by
vendor and agent.

One response was from Sandra Gibney, communications manager of RECO -
the governing body of Ontario's real estate agents and brokers. She
noted that agents not only have an obligation to disclose, but must
"take reasonable steps to determine the material facts" relating to
the transaction.

The regulations also state that the registrant must disclose to the
customer all material facts "that are known by, or ought to be known
by, the broker or salesperson."

Gibney referred to two RECO discipline cases involving the failure to
disclose the existence of a grow-op.

One involved Mississauga agent Donna Burgess. According to the
decision of a RECO panel in June, Burgess was representing both the
buyer and seller in a 2005 transaction, but failed to disclose to the
buyers that the home they were planning to purchase had been a grow house.

This was a material fact, and she was aware of it because in 2003,
she had helped the sellers buy the same property. At that time the
agreement of purchase and sale contained a disclosure that the use of
the property "may have been for the growth or manufacture of illegal
substances."

Burgess failed to inform the buyers about the disclosure, claiming
she had forgotten about it. The buyers and sellers signed a mutual
release and the deposit was refunded.

A complaint was filed with RECO and a discipline panel ruled that
Burgess had failed to comply with the Code of Ethics. It ordered her
to pay a penalty of $15,000.

Given that there are thousands of current and past grow-ops in
Ontario, and the listings of few, if any of them, disclose the
history of the property, I would have expected to see more discipline
cases like the Burgess decision.

Len Chapman, a Royal LePage sales rep in Richmond Hill, emailed to
say RECO's rules already require disclosure of facts that an agent
ought to know.

True enough, but it seems they are being widely ignored when it comes
to grow-ops.

The vast majority of agents and brokers I've dealt with over the
years are competent, honest and ethical. I wrote about the issue to
alert readers to the signs of grow-ops, since the history of a
property - despite RECO rules to the contrary - is not always
disclosed as it should be.

The courts have ruled that police must disclose the existence of
grow-ops, but it clearly isn't happening in an open and effective
way. It's time this province had a comprehensive and fully accessible
database to eliminate the excuses.

Bob Aaron is a Toronto real estate lawyer whose Title Page column
appears Saturdays.