Section 32 Disclosure of Interest under REBBA, 2002
This section for some reason is always under debate. This is the section:
Acquisition or divestiture by registrant
32 (1) Unless the registrant first delivers to all other parties to the agreement the notice described in subsection (2) and the other parties have acknowledged in writing receipt of the notice, no registrant shall,
directly or indirectly,
(a) purchase, lease, exchange or otherwise acquire for himself, herself, or itself, any interest in real estate, or make an offer to do so; or
(b) divest himself, herself, or itself of any interest in real estate, or make an offer to do so.
Contents of notice
(2) The notice referred to in subsection (1) shall be in writing and shall include,
(a) a statement that the registrant is a brokerage, broker or salesperson, as the case may be;
(b) full disclosure of all facts within the registrant’s knowledge that affect or will affect the value of the real estate; and
(c) in the case of a transaction described in clause (1) (a), the particulars of any negotiation, offer or agreement by or on behalf of the registrant for the subsequent sale, lease, exchange or other disposition of an interest in the real estate to any other person.
This has nothing to do with “related parties”. That was s. 18 of the Code of Ethics. This is a different, separate and distinct disclosure obligation. Don’t get them confused. Just because there’s only one Form, be sure to fill it out correctly, use the Form for the “paperwork”. Use the Act and the Code as sources for your obligations.
This disclosure is the sale or purchase of property. It may be “direct or indirect”.
The indirect transaction on the buy side might entail you loaning the downpayment, taking back a mortgage, being registered on title (after the deal closes), guaranteeing the mortgage, having an interest as a beneficiary under a trust, holding shares in a corporation which is participating in the purchase, etc.
What is doesn’t mean is acting for your daughter who is purchasing her first house, with her own money, qualifying for her own mortgage, taking title in her own name, all with your “advice” but without any financial involvement on your part.
Mere advice doesn’t elevate the situation to having an “interest’.
This is the obligation to advise other parties to the deal. If you are actually buying the property directly or indirectly, you have to say so. You also have to convey the following information prior to your offer:
- Your registration status,
- Facts that you know that AFFECT the VALUE,
Any flip or rollover of the property.
You appreciate that in a third party transaction, your special, inside information about the real estate market in that locality is what is being sought here. That’s the purpose of the s. 32 Disclosure.
On the “sell side”, you need to disclose that there is going to be an expropriation for a highway and that's why you are selling now, before it actually happens.
Be sure to keep the two section straight:
Law/Source When To Whom Purpose
s. 32 Act Before Offer Other side inside facts and flip
s. 18 Code Before Offer Clients/Customers potential conflict
Brian Madigan LL.B., Broker