FEB 1, 2013 – by Don Dickson -Bareland Condominiums
REIX, our insurer, has raised an important issue that could have very serious potential liability for members involved in the sale of bareland condominiums.
Because of the urgency of the risk, CREB® is responding with an immediate change to its condominium policy.
It is critical that all brokers make sure their REALTORS® are aware of this change.
The new policy, effective immediately, is in response to two recent court cases involving bareland condos, one of which resulted in a settlement in excess of $750,000. The other case revolved around a buyer who claimed 10 years of condo fees because he was never told the property was a bareland condo. The listing agent was not covered by REIX because he knowingly listed the property as a single-family dwelling.
REIX will no longer cover REALTORS® who purposely list bareland condos improperly. Instead, REIX considers it to be fraud.
CREB®’s Condominium Task Force has been instrumental in developing the new policy with input from other stakeholders, including REIX.
All properties that are registered on title as condominiums, regardless of style or listing type (residential or rural) and regardless of whether they are operating as condominium corporations, must be identified as condominiums in the appropriate data fields.
The MLXchange database has been modified to allow condominiums to be entered as the property class for rural listings.
Unfortunately, it’s simply not feasible to change the historic data on sold, expired or terminated listings.
When preparing CMAs, it’s best to avoid using the “property class” field until the new policy has been in effect for a while to give the database time to reflect the changes. CREB® strongly recommends that members use the “condo view” feature sheets for the agent detail view and, especially, for the client detail view when distributing condo information.
Members who have current listings affected by the new policy are asked to please make the necessary changes to the listings to bring them into compliance with the new policy as soon as possible.
For new listings, CREB®’s auditors will be carefully reviewing the information provided in all data fields. Listings that do not comply with the new policy be flagged and the listing agent will be sent a friendly reminder that the data is incorrect and must be corrected within two business days. There will be no penalties or service fees charged to members until after March 1, 2013. When a member has been notified that a listing is not in compliance and does not make the necessary changes, a second notice will be issued with a one-day notice that the listing will be removed from the system.
Let’s take a closer look at the new policy:
CREB® Policy on Condominiums Properties
Properties that are registered on title as a condominium within the boundaries of any city, town, village or hamlet must be listed as a condominium whether it’s being operated as a condominium or not. Any property registered as a conventional or bareland condominium with Land Titles must have “Condo” entered for the “Property Classification” field on the CREB® database. When listing a condominium, members must use the AREA Condominium Listing Form. Buyers’ Representatives must use the AREA Condominium Purchase Agreement.
Rural Bareland Condominiums located outside the boundaries of any city, town, village or hamlet must be listed as “Rural” for Listing Type with Property Class as “Condominium” in the database. Any bareland condominium with a detached home must have “Detached Condominium” input for the “Building Type” field. Members must input “Bare Land” as the first selection for the Property Ownership field. Buyers’ Representatives must use the AREA Condominium Purchase Agreement when writing an offer on a bareland condominium and attach the country residential property schedule. Listing Representatives must use the AREA Condominium Listing Agreement and attach the Country Residential Property Schedule.
CREB® understands that these changes will take some time to become normal practice and will do its best to assist members with this change. There will also be a series of information sessions to provide additional details. Stay tuned for dates and times.