The danger in dropping a home inspection…

by Olivia D'Orazio20 Apr 2015
The Real Estate Council of Ontario (RECO) is renewing its call to agents to be vigilant when dealing with homes that may have once contained urea formaldehyde foam insulation (UFFI), which was a commonly used material in the mid- to late-1970s. Due to perceived health issues, the Canadian government banned the product in 1980.
Most sale agreements in Ontario include a clause that has the seller guarantee that, to the best of their knowledge, there is not and never was any UFFI in the home.
In its reminder, RECO says listing agents must explain the implications of this clause. Namely, sellers must only agree to the warranty based on what they know. For instance, a seller must disclose that UFFI once existed in the home, but was removed.
Also, agents must ensure that the home inspection matches what the seller describes in the warranty.
The reminder comes as a growing number of buyers are expressing a willingness to forgo the home inspection clause when confronted with a multiple-bid situation.
In the case of UFFI disclosure, it is important to note that this warranty extends beyond the transaction’s close. Both the seller and the agent could face litigation if the warranty turned out to be false.
The best way to protect your seller clients is to educate them regarding the implications of a UFFI warranty. Those agents representing buyers, on the other hand, would be wise to insist that a full inspection is completed, particularly for homes built before 1980.


  • by 4/20/2015 4:24:13 PM

    why would an agent be responsible for false information supplied by an owner?

  • by Bob P 4/20/2015 5:03:43 PM

    interesting that since 1993 Canada Mortgage and Housing insured mortgages DO NOT NEED A DECLARTION under the National Housing Act

  • by Cathy H 4/20/2015 8:05:45 PM

    I have an opposition to the word “insist” my belief as a realtor is to guide, educate, and council on best practices so that the client makes an informed decision. This is especially true when a calculated risk is involved as in foregoing a home inspection in the case of multiple offers. As a realtor it is our duty to carry out the lawful instruction of the client - not insist that they do as you would do even if you feel they are making a decision that may not be in their best interest. Form 127 can be used to document your council with the client and ensure that it is memorialized. I don’t use this form to “cover my butt” but rather to drive home the significance of the decision the client is making and that it should not be made lightly.

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