RECO gets asked constantly for a checklist of material facts, and it declines to give one — on purpose. What is material to one buyer or seller may not factor into another’s decision at all, so the regulator gives you a process for deciding, not a list to consult.
Key takeaways
Bulletin 7.3 states the underlying difficulty directly: “RECO is often asked for a list of facts that would be considered material. But what is a material fact to one buyer or seller may not factor into another client’s decision-making process for many different reasons, not the least of which is the intended use of the property.” (RECO Bulletin 7.3, Material Facts) Instead of a list, the bulletin sets out a four-step obligation: take reasonable steps to determine the material facts; promptly disclose them to the client; advise the client to consider whether the facts might affect their decision; and make best efforts to obtain an acknowledgement that the disclosure and advice were received — and if acknowledged, provide the client a copy of that acknowledgement.
That four-step structure is the actual answer to “how do you decide” — it reframes materiality from a single yes/no judgment you make privately into a documented process you run with the client. Step one, determining the facts, is itself an active duty, not a passive one: you are expected to take reasonable steps to find out, not simply to pass along whatever you happen to already know.
Bulletin 7.3 does give examples of items “often considered to be material facts” — the type of insulation and wiring (knob-and-tube, for instance), the type of plumbing (lead or galvanized), the age, condition and ownership status of major home systems, a history of flooding, structural damage or a previous dwelling fire, renovations made without required permits, the property tax amount and any special assessments, zoning by-laws affecting legal use, and whether a property was used as a grow operation or for other illicit purposes. Notice these examples all share a feature: they bear on the property’s condition, legal use, or cost of ownership — the kind of thing that changes what a reasonable buyer would pay or whether they would buy at all.
A separate RECO bulletin addresses the category most agents actually struggle with — not a physical defect, but a property’s history or reputation. Bulletin 7.5 states plainly that “the legislation does not define ‘stigma,’” and gives its own examples: a property used in the ongoing commission of a crime, a death at the property, a former owner who was a notorious individual, reports the property is haunted, or a remediated former grow operation. (RECO Bulletin 7.5, Stigmas) A stigma and a material latent defect are legally different things, and getting the category wrong is the actual trap. Treadstone Law’s doctrine explainer draws the line clearly for the underlying legal test: a material latent defect is “one that makes the property dangerous to live in, unfit for habitation, or otherwise significantly impairs its use,” and a latent defect itself is “a hidden problem with a property that is not discoverable by a reasonable inspection.” (treadstonelaw.ca, material latent defect defined) See material latent defect defined and patent defect defined for the two glossary terms this line actually turns on. A death in a home is a stigma question, not a defect question, precisely because it says nothing about whether the structure is safe or fit for habitation — see stigmatized property defined for how that distinction plays out for the specific death-disclosure question, and this case file for how a materiality call actually gets litigated after the fact.
Treadstone Law’s caveat-emptor explainer puts the deciding factor precisely: the seller has no general duty to volunteer everything known about a property, but the seller’s actual knowledge of a defect — not merely whether the defect happened to be visible — is what turns silence into a problem. (treadstonelaw.ca, caveat emptor explained) For an agent, the parallel obligation under Bulletin 7.3’s first step is to take reasonable steps to determine the facts — which means an agent who has reason to suspect a material fact and simply does not ask cannot rely on not technically knowing it. The CREA REALTOR® Code’s Article 4 states this as an affirmative obligation: a REALTOR® “has an obligation to discover facts pertaining to a property which a prudent REALTOR® would discover in order to avoid error or misrepresentation,” applying equally whether you represent the buyer or the seller. (CREA REALTOR® Code, Article 4).
A seller mentions offhand that the basement flooded three years ago, fully repaired, cause identified and fixed, with no recurrence since. Run through Bulletin 7.3’s four steps: first, determine the facts — when it happened, what caused it, what was done to fix it, and whether it recurred. A fully-repaired, non-recurring flood with an identified and corrected cause is generally treated as resolved history rather than a live latent defect, so the materiality answer here likely differs from an unresolved, cosmetically-patched flood, which reads much more like an ongoing latent defect. Either way, step two still applies — disclose what you know, promptly — and steps three and four still apply regardless of which way the materiality call lands, because the client’s own reaction to the fact is theirs to have, not yours to pre-judge. The one constant across every version of this fact pattern: if a buyer asks a direct question about flooding history, it must be answered honestly, regardless of how the materiality analysis above comes out.
The same worked logic applies to a former grow operation, which Bulletin 7.5 also addresses: there is no standalone rule requiring disclosure of the label itself, but a grow operation frequently leaves behind exactly the kind of physical condition — electrical alterations, moisture damage, structural changes — that Bulletin 7.3’s material-facts duty attaches to once you actually know about it. The stigma label and the physical condition are two separate questions running in parallel, and step one of the four-step process — determining the facts — is what tells you which one, or both, you are actually dealing with.
No, and deliberately so — Bulletin 7.3 states that what is material to one buyer or seller may not factor into another client’s decision at all, and sets out a four-step process for determining and disclosing facts rather than a fixed list.
No. A death is generally treated as a stigma question under Bulletin 7.5, which is legally distinct from a material latent defect — the defect test turns on whether a known condition makes the property unsafe or unfit for habitation, not on the property’s history or reputation.
Not automatically. The REALTOR® Code’s Article 4 imposes an obligation to discover facts a prudent REALTOR® would discover, and Bulletin 7.3’s first step is an active duty to take reasonable steps to determine material facts — not knowing something you had reason to ask about is not the same as having no obligation regarding it.
A short call can walk through RECO’s four-step process against your actual file before you have to guess.
