July 15th - 2016

Legal beat: Life’s a beach for waterfront buyers

The buyers were attracted to a waterfront lot with access to a nearby beach. Wording in the real estate listing led to disciplinary action against two registrants.

Legal Beat

The buyers were attracted to a waterfront lot with access to a nearby beach. Wording in the real estate listing led to disciplinary action against two registrants.

Legal Beat

by Merv Burgard, Q.C

This case involved a waterfront property and access to a nearby beach. The buyers were attracted to the prospect of living in a rural community, away from growing traffic and noise of their current home.

The first registrant in this RECO discipline decision listed the property on the MLS® System, and she included these statements in the listing: “Backing onto EP land” (i.e. land zoned or designated as “environmentally protected”) and “Deeded Beach Rights”. As well, she affixed a sign to the bottom of the “For Sale” sign that stated “Deeded Beach Rights”.

Another registrant from the same brokerage assisted the buyers, bringing them to view the property and helping them to submit an offer. He showed them the beach and access points.

The buyers asked him to confirm the “deeded beach rights” and asked questions about beach access. The seller said that those rights existed and the first registrant promised to get a document that would clarify the matter. The second registrant did not advise the buyers on that issue and did not suggest that they include in the Agreement of Purchase and Sale (APS) any condition pertaining to beach rights or access.

Two problems ensued. Firstly, a title search revealed that access to the beach from that property was “Subject, however, to the right of the owners and occupants from time to time of lots on the north side of [the street], and other persons to use and occupy at reasonable hours for bathing purposes that part of the said water lot consisting of the production in a southerly direction of [the street].” No deeded beach rights were attached to the property title. “In essence, the deeded beach rights amounted to a public right of access that happens to be located near the property.”

Secondly, municipal documents revealed a problem with the claim about Environmentally Protected land. Contrary to the representation that the property backs onto EP land, city documents showed that the land behind and abutting the property was in fact zoned “agricultural”, and township zoning maps confirmed this.

The first registrant had “received information from the seller, who incorrectly believed that the public access rights were ‘deeded beach rights’ to the water”, according to the RECO decision. After learning of this error and before the closing, she removed the affixed sign that made reference to beach rights from the property’s “For Sale” sign.  She later stated that she ensured “that the offer made no reference to ‘deeded beach rights’.”

The buyers were not informed of the true nature of the beach rights prior to the signing of the APS nor were they advised of the fact that the adjacent land was zoned agricultural rather than environmentally protected.

Both registrants were fined $10,000 and required to take an OREA Real Property Law Course and an REIC Ethics and Business Practice Course.  

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MERV’S COMMENTS

Mervin Burgard Q.C.

No deeded beach rights were attached to the title for the property. In essence, the beach rights amounted to the stated public right of access that happened to be located near the property. Moreover, the EP designation was simply wrong.

As the REBBA Code of Ethics requires, REALTORS® must take reasonable steps to determine and disclose material facts and use their best efforts to prevent error, misrepresentation, fraud or any unethical practice in respect of a trade in real estate. You must also act in your clients’ best interests.

Several steps could have prevented these problems. A registrant can check with the city, read the title documents and talk to the sellers’ lawyer, all before completing the listing. As well, making the APS conditional on the clients getting legal advice and confirmation of information may have helped both of these registrants.

Asking the sellers for information may not be enough protection. Don’t just take the sellers’ word for it about something. Remember that REALTORS® must verify facts. When we play cards, my children love and trust me -- but they still cut the cards!

The above decision was rendered by RECO on Feb. 11, 2015. Full details can be viewed on the Real Estate Council of Ontario web site at www.reco.on.ca and look under “Complaints and Enforcement.” Search by year to find this decision, posted on Feb. 11, 2015.  

Mervin Burgard, Q.C.

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