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MREA
MANITOBA
                   1873 INKSTER
                   WINNIPEG I MANITOBA I R2R 2A6
                                                          RECEIVED 


REAL ESTATE
ASSOCIATION        T.204.772.0405 I F. 204.775.3781




              January 28, 2010


              Bill Baluk
              The Manitoba Securities Commission
              500 - 400 st. Mary's Avenue
              Winnipeg, MB R3C 3K5


              Dear Mr. Baluk,

              Re: The Neufeld Report on Disclosure in Real Estate Transactions in Manitoba

              This letter is written in response to the public notice issued November 12, 2009 inviting
              comments in response to the Neufeld report.

              The Manitoba Real Estate Association represents approximately 1850 licensed brokers
              and salespersons comprising three real estate boards as well as individual members.
              These members represent buyers and sellers throughout all areas of the Province of
              Manitoba.

              Since the Manitoba Law Reform Commission issued its working paper in 1973 the
              Association has been involved in a number of endeavours that have encouraged the
              sellers of real property to be more transparent and disclose property defects or flaws
              which are not easily discoverable. These include:

               1. 	 Substantial increases in education programs for real estate brokers and
                    salespersons including advanced pre-licensing course and annual continuing
                    education programs with great emphasis on seller disclosure obligations and agency
                    duties.

               2. 	 Increased public information and education distributed through brochures,
                    publications and other means to make the public more aware of seller disclosure
                    obligations.

               3. 	 A shift from assumed seller agency/seller sub-agency to assumed seller
                    agency/buyer agency as a default position in all transactions. This initiative has
                    enabled buyers to retain their own real estate representative to act solely for them to
                    assist in protecting their interests including advice and direction related to property
                    condition disclosure.

               4. 	 The introduction of the Sellers Property Condition Disclosure Statement. When
                    initially introduced by the Association in the early 1990's the Association promoted
                    and encouraged the mandatory use of the disclosure form by registrants in the
                    province. However resistance was encountered in obtaining the support for making
   the use of the form mandatory and the Association backed away from its efforts to
   make such a form mandatory.

5. 	 Although not mandatory, the Sellers Property Condition Disclosure Statement has
     been used by our members on a voluntary basis since first being introduced, and has
     been amended on several occasions to improve its effect, the most recent
     amendments being in 2008 in response to the concerns raised by the Manitoba
     Court of Appeal as referred to in the Neufeld report.

The Association is of the view that greater disclosure by sellers would be an
improvement in most instances when resale real property is being sold to members of
the public. The Association is of the view that any further measure that can be taken to
make it easier for sellers to voluntarily disclose property deficiencies beyond existing
legal obligations should be encouraged. The Association agrees with Mr. Neufeld's
recommendation that the statutory residential offer to purchase form be amended to
include a clause similar to what is used in Nova Scotia that enables the seller and buyer
to contractually agree on specific disclosures to be made by the seller in a Sellers
 Property Condition Disclosure Statement. In fact, the Association wishes to express the
view that if an appropriate mechanism could be identified to make it mandatory for all
 sellers of real property in Manitoba to provide appropriate statements as to their
 knowledge of the property's condition, the public would be better served.

Each real estate transaction is unique. Some buyers just do not take their responsibility
to inspect the property seriously, and some sellers do not voluntarily disclose information
on defects and deficiencies, sometimes only because they are unsure of what to say or
do. One buyer might not care that a furnace is old and may need replacing soon, yet
another may be counting on it lasting for five years and could really use more
information which is only available from the seller. Therefore the wording of the seller's
disclosure statement must be carefully balanced to provide practical and reasonable
 protection to both buyers and sellers, without creating a trap for sellers to be pursued by
 unreasonably resentful or remorseful buyers who do not take the time to inspect obvious
 defects with diligence.

 We observe some practical problems with the Nova Scotia model. Once the seller gives
 the property condition statement and the buyer objects to a particular item, and gives
 notice, the Nova Scotia model allows either party to cancel the contract at any time up to
 the closing of the transaction. We believe that only the buyer should be permitted to
 terminate the contract, and that the time period for termination should be limited to a
 negotiated time that expires in advance of the closing date. Also, the wording in the
 Sellers Property Condition Disclosure Statement should be carefully balanced to reflect
 the realities that Manitobans face.

 We therefore support the recommendation that the statutory offer to purchase form
 contain a clause entitling the buyer to a seller's property condition disclosure statement
 which, if conditions or defects are revealed that are unacceptable, would entitle the
 buyer to terminate the contract shortly thereafter. Furthermore, the clauses contained in
 a Sellers Property Condition Disclosure Statement that would accompany the offer
 should be carefully considered so as not to place onerous obligations on sellers to
 provide information beyond what a seiler is reasonably capable of giving, and what is
 reasonably required by a prudent buyer.
In conclusion, we recognize that when buyers are disappointed in a property's condition
they often criticize the seller for not disclosing more. Sometimes it is not the seller's
fault. However, sometimes sellers are also not being prompted to disclose enough. The
Manitoba Real Estate Association is of the view that anything that can be done to make
it easier for a seller to disclose the condition of a property would be beneficial to the
public. The Association would prefer that measures be taken to require all sellers of real
property to provide the buyer with a property condition disclosure statement based on
the sellers' actual knowledge of and experience with the property during the sellers
 ownership.

The Manitoba Real Estate Association looks forward to further dialogue on this topic.

Sincerely yours,

				
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