A Sea of Troubles

mayday, n. International radio-telephonic distress signal
used by ships and aircraft.  [F m'aider help me]

caveat emptor, Disclaimer of responsibility for buyer's or bargainer's
disappointment [= let the buyer beware] [L caveo take heed]

You don't have to go down to the sea in ships to run the risk of drowning.  Instead, you can stay ashore, take a run at the real estate market as a potential buyer, and end up wondering if you'll ever survive the experience.  Like it or not, there are rocks and shoals out there that aren't immediately obvious and, worse still, won't necessarily get pointed out by the agent you're working with.
You doubt it?
Well, let me quote from a discussion paper (Disclosure and the REALTOR) that the Canadian Real Estate Association recently distributed to all its members:

1) Caveat emptor (buyer beware) is alive and well in the real estate
industry. Accordingly, buyers are required to exercise care in a
purchase transaction.
2) Sellers are generally not required by law to disclose known patent
defects (i.e. those which can be discovered in the course of a
reasonable inspection).
3) If disclosure is not required, a seller is entitled to remain silent.
4) As a matter of law, an agent's obligation of disclosure does not
exceed  that of the principal.  In other words, if a seller is not
required to make a disclosure, neither is the listing agent.
5) Sellers are generally required by law to disclose material latent
defects (i.e. substantial problems which cannot be discovered in
the course of a reasonable inspection), which are known or should
be known.
6) Sellers are generally not required to disclose that a property has
been used for criminal purposes.

Admittedly, I've slightly rearranged the order of these sentences, which underpinned an account of the ethical conduct that CREA now expects of its members:  an intermeshed duty of care and duty of disclosure.  However, the document's issue was largely triggered by increasing concern about the existence of Grow Houses (homes that are used to cultivate marijuana plants) -- which is something I touched upon in my October 2003 newsletter and is more fully explained in a website that the Niagara Regional Police have put together.  Moreover, the document recommends a need for caution when it comes to publicising grow house addresses, pointing out that, apart from all else, the action could fall foul of the federal privacy legislation that now impinges on the way real estate people are required to behave.

In order to make my point, though, let me take a slightly different run at things, as follows.
1.  A patent defect is something that should be apparent to anyone who looks at a property, even if they don't realize the seriousness of it.  Examples include a roof with half its shingles missing, a basement that's full of water,  or anything else that calls for some fairly obvious attention and/or replacement.
And, as CREA explains, both the seller and his/her listing agent have no obligation to point these inadequacies out to anyone.  It's up to a buyer to notice them and, in effect, to suffer the consequences if they don't. 
2.  A latent defect is one that isn't likely to be noticed by many people, especially if they haven't previously been exposed to it.  Examples include a septic system that urgently needs cleaning (but shows no signs of it in the heat of summer), significant structural cracks that are hidden behind built-in bookcases or kitchen cabinets, and, of course, the existence of ureaformaldehyde insulation (UFFI) that has never been removed.
And in this regard, CREA does note that sellers are generally required by law to disclose these shortcomings.  Indeed, it goes on to recommend drawing a buyer's attention to them and suggests having an expert take a look at the implications.
3.  However, in the case of grow houses -- in which you're probably looking at both patent and latent defects -- CREA takes the position that sellers are generally not required to disclose that a property has been used for criminal purposes (which is what marijuana growing is certainly considered to be by the law enforcement people if no one else).  CREA's argument is that the knowledge can be seen as personal information that doesn't have to be revealed by a seller and therefore should not be passed on by salespeople working for the seller unless they have permission to do so.
In other words, the real estate industry isn't going to voluntarily tell you something that you really deserve to know.

I can understand the legal eagle reasoning behind the conclusion and I won't argue with its correctness, but I'm not afraid to take some issue with it.
There have in fact been three occasions when I've shown properties that I suspected had been used as grow houses, and in each case I wasn't forewarned by the listing agent.  Let me assure you, I steered my buyers elsewhere and made no apology for doing so.  Nevertheless, I'm not comfortable with the thought that CREA might have found my behaviour remiss had I been working for the sellers rather than the buyers.
In any case -- and to finally make my point -- you can infer (as I do) that you had better be beware if you're dealing with an agent who has a grow house listed or any other agent who's working for the seller.  The tilt is not in your favour.

To make matters worse, though, grow houses are not the only muddied waters in today's real estate market.  There are a few other areas in which the "official" view (both here and in the USA) is that a buyer is, by legal definition, at some risk unless there's a client relationship with the agent who's showing them properties.  This is something that cannot apply when you're dealing with a listing agent.  Nor is it likely if a salesperson hasn't arranged to work for you as a Buyer Agent -- which, as my January newsletter maintained, doesn't have to be in writing but can be set up with just a verbal agreement.
Thus, I suppose that, despite my concerns, the CREA document does at least add weight to my ongoing enthusiasm for the Buyer Agency concept (and, of course, its ultimate version, the Exclusive Buyer Broker idea).

In other words -- and if I may be allowed to make the most of my metaphors -- I'm reminded of the comment that was frequently uttered during my days (way back when) in the British Royal Navy:  "I'm all right, Jack.  My dinghy floats."
Or to put it another way:  you can end up on your own, sink or swim, if you allow yourself to be ushered on board by someone who isn't your Buyer Agent. You can't depend on having your "mayday" cries heeded and you can't rely on CREA to throw you a life jacket!