Agents treading lightly with illegal suites

by REP24 Aug 2015
By John Tenpenny

Recent changes to how agents advertise homes with secondary suites are slowing down deals and may be depriving the industry of an important selling tool.

“There are people out there who want to buy houses with illegal suites, and are willing to take on the risks of renting out the suites,” says James Knull, an Edmonton-area real estate agent specializing in investment properties. “But most agents aren't going to advertise an illegal suite as an illegal suite to be extra cautious. For someone who wants an illegal suite, it’s going to be much harder to find one, because the data isn’t available.”

After a number of recent civil suits pertaining to the legality of homes sold with basement suites – including one where an agent advertised a suite as being legal, when in fact it wasn’t – the Real Estate Council of Alberta has recommended agents remove that wording from their listings and ads unless legality has been verified.

Knull agrees that unless an agent is 100 per cent certain the suite is legal, advertising online that a home has a suite is a no-no, as it puts agents at risk of lawsuits.

But part of the issue, Knull says, is that currently on MLS there is no way to make a distinction as to whether a secondary suite is legal or illegal.

Knull acknowledges that full disclosure is essential as well as wining the buyer’s signoff. With that in mind, he says “I think you should be able to advertise the property with the proper disclosure.”

There is an exception. “For the average Realtor, who comes across a basement suite once a year, they should play it safe,” he says.

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