The Duty to Disclose Kitec Plumbing by Real Estate Agents
Just what is Kitec?
Kitec plumbing is made up of flexible aluminum pipe between an inner and outer layer of plastic pipe (PEX pipe) with brass fittings. Kitec was sold between 1995 and 2007 for potable water, in-floor, and hot-water baseboard heating systems. It was far less expensive than copper and therefore was used in installations where there was price sensitivity. In many cases it broke down prematurely and required replacement. If it breaks down early and unexpectedly, there’s going to be a flood and consequential damage.
The general wisdom is that Kitec Plumbing should be replaced. Quotations for larger scale replacements, that is, condominium apartments and twonhouses usually run in the range of $12,000 to $15,000 per unit.
In fact, there was a class action which resulted in a settlement. So, maybe you’re entitled to some money. See here: http://www.kitecsettlement.com/
Kitec is rarely a latent defect. It’s possible, but I have never, ever come across such a situation. It usually very much “in the open” and quite “visible”, but naturally, you have to know what you are looking for. If you don’t, then you will never find it.
Kitec in many situations does amount to a material fact. This means it’s significant enough to affect the buying or selling decision. However, that must be determined on a case by case basis.
Assuming that it is a material fact, that means that the Listing Agent has to tell their own client, the Seller, about the Kitec. Great! They already knew about it and said don’t tell anybody.
The Buyer’s Agent has to investigate, determine and verify the material facts. That means by whatever means, they should be finding this out. They have to tell their own client the Buyer about this. They have no obligation to tell the Seller.
The Seller doesn’t have to tell anybody. The Listing Agent doesn’t have to tell anybody (other than the Seller). The Buyer Agent needs to figure this out. That’s not easy when the Listing Agent is not talking (on the Seller’s instructions).
Essentially, that means that a naïve, innocent buyer and an inexperienced agent could easily be duped.
If you are interested in reading the RECO Bulletin on this, you will find it here: http://www.reco.on.ca/professionals-news/kitec-plumbing-and-material-facts/
That’s the response from the legal perspective. However, from an ethical perspective, if I’m asked to be the Listing Agent, I’m not taking the Listing without the Seller authorizing this disclosure. It is a clear breach of fiduciary responsibilities to disclose without authorization, and contrary the Seller’s explicit instructions. That would expose the Listing Agent to significant civil liability.
But, for my part I don’t ever want to drive by that place in the future and wonder if the Buyer ever found the Kitec. So, I’ll pass on that Listing upfront.
Brian Madigan LL.B., Broker