Imagine you are a discerning buyer, and you find your dream home.

Would it bother you to know that a few years back, it was used as a marijuana grow house?

Yes, or no, it’s still your right to be aware of the facts.

One Toronto realtor is in hot (bong?) water after selling a house without fully disclosing the facts…

Wait a second, what were we talking about?

Sorry…..my short term memory isn’t what it used to be…

….oh yeah! Grow houses!

Last month, a case was heard in front of the Real Estate Council of Ontario, involving a realtor who was charged with breaching FIVE rules of the RECO Code of Ethics.

The Realtor charged under the RECO act had represented the buyer of a house in 2003, that in 2002, had knowingly been used as a marijuana grow house.   Prior the the execution of the 2003 Agreement of Purchase and Sale, the prior use of the property as a grow house was disclosed to the Realtor.

Here is a copy of the disclosure included:

“The Buyer acknowledges that the use of the property and buildings and structures thereon may have been used for the growth and manufacture of illegal substances and acknowledges that the Seller makes no representations and/or warranties with respect to the state of repair of the premises and the Buyer accepts the property and the buildings and structures thereon in their present state in an (as is) condition.”

To simplify: Bob bought a house from John & Cathy, and the person who owned the house before John & Cathy had used it to grow marijuana.  John & Cathy told Bob this, and Bob acknowledged these facts.  Both the Bob and John & Cathy signed the Agreement of Purchase & Sale with the above disclosure included.

So where did the Realtor get into trouble?

The Realtor was hired to sell this house in 2005, and listed the property on MLS.

But he did NOT, however, disclose the fact that this property had been used as a marijuana grow house.

Even though he handled the purchase of this house two years earlier, and actually had his client sign a disclosure statement indicating knowledge of the previous use of the property as a marijuana grow house, he did NOT disclose these facts in 2005.

He showed the house to a potential buyer, who became his client, and they put in an offer on the house that was accepted.

Shortly before the closing date, the buyers became aware of the prior use of the property as a grow house.  They requested a mutual release from their Agreement of Purchase & Sale, including a return of their deposit funds.

They then filed a complaint with RECO about the Realtor.

The Realtor was tried before the Real Estate Council of Ontario, and found to have breached the following Rules of the RECO Code of Ethics:

Rule 1 – Ethical Behaviour: A Member shall endeavour to protect and promote the best interests of the Member’s clients.

Rule 2 – Primary Duty to Client: A Member shall endeavour to protect and promote the best interests of the Member’s clients.  This primary obligation does not relieve the Member of the responsibility of dealing fairly and honestly and with integrity with others involved in the transaction.

Rule 10 – Misrepresentation or Falsification: A Member shall not make any statements or participate in the creation of any document or statement that the Member knows or ought to know is false or misleading.

Rule 11 – Discovery of Facts: A Member shall discover and verify the pertinent facts relating to the Property and Transaction relevant to the Member’s Client in order to fulfill the obligation to avoid error, misrepresentation, or concealment of facts.

Rule 21 – Advertising: A Member shall ensure that all advertising and promotion by or on behalf of the Member, including for Properties and services, is not false, misleading, or deceptive.

So what became of the Realtor in question?

The Realtor was ordered to pay an administrative penalty of $15,000 to RECO within 180 days of the discipline decision.

Don’t ever say that Realtor’s aren’t held accountable for their actions…