Changes to the rules, leaves sellers with more liability.

Posted by Jeanine B. Osborne on Monday, August 29th, 2016 at 3:29pm.

In this industry the changes come quick and sweep across the market with force.  Recently the Real Estate Council of Alberta made changes to a simple aspect of selling your home, and with that change came increased responsibility and liability for both Sellers and Real Estate Professionals in Alberta.  For a very long time now, the province has operated on a standard measurement system (BOMA) for commercial and industrial measurement; while ignoring the needs for a standard measurement system with regards to Residential measurement of homes for sale.

The size of your home matters much less to your sale than what you think.  In fact, sellers are not required to put the size of their home on any advertising at all.  However, if you are listing your home on MLS®, you will need to enter a size on the MLS® listing for it to be complete and active on-line, within the Edmonton Real Estate Board.  If you've ever printed off an MLS® report, you will most likely have noted the small print wording; "the information found herein is deemed reliable but does not form a part of any future contract." The question being, 'what is reliable?'

REALTORS® are a part of a professional organization and we are monitored by ethical boards and committees of our peers.  We are deemed to be reliable and our work and advertising should be marketed truthfully and responsibly. Should be.... Yet, there are so many lawsuits over square footage.  Why is that?  Simple mistakes, inaccurate representation and even worse, plain old lying are all parts of an industry that has been paying out for years over inaccurate misrepresentation.  Not only have REALTORS® and brokerages been taken to task, now the public has.

What I mean to say is that, due diligence and seller/buyer responsibility is always increasing as time moves forwards.  What used to be a one page contract is now eight.  Buyers and Sellers now both have to sign a contract to work with a REALTOR® or their brokerage.  Information and privacy laws are changing all the time and with those changes less information is available to the public about items that used to be common knowledge, like square footage.

Edmonton is an example of a community that used to list the sizes of all its' homes as a part of its' taxation information.  Fireplace, air conditioners and basement permits were listed on a property summary, but now, there is none of that.  In fact, any member of the public could look up the size of a house and quickly deem if the size of house they thought they bought was correct.  Not anymore.  Moving forwards, you'll need to measure the house yourself as it won't be able to be verified from any third party source, and certainly not easily.

Home owners would buy from a builder, believing they got one size and then years later re-list with their REALTOR® only to be told they had to advertise their home much smaller than what they thought it was, because builders were able to measure homes in a different way than how resale homes are marketed.  Well, that's not fair is it?

Is the new measurement standard tricky? Let me give you this as an example:  If you are in a semi-bungalow with loft like area upstairs, you would measure the upstairs area if the room at some point has a 7 foot clearance, but only that part of the room that measures above 5 feet high. (that will drastically change a lot of homes square footage for years before 1960.)  YUP... that can be tricky for professionals to 'remember'.

Or how about this example..If you have a bay window in the room that goes all the way to the floor it is to be included as a part of the square footage, but if that bay window has any toe-kick at all, it is not to be included in the square footage.  Sure, folks will remember that one too.

In fact there's a 36 page guide just to be certain of what you should measure.

Is it something you should leave up to your REALTOR®? Can you still be sued over square footage? All good questions, and yes, as a seller, anything you let your REALTOR® advertise; you are responsible for.  Ignorance for the rules will not help you in court, you'll still be deemed as a part of the problem.  In the end you, as the Seller are entirely responsible for all the aspects of your sale, including what your REALTOR® does, so trust with and in your REALTOR® IS IMPERATIVE.

I won't be measuring any listings from herein, I will call the professionals to do so. Watching the changes as they take effect and noting what some of my fellow colleagues are doing, I see all too well that this is another area in which corners will be cut and most sellers won't be told the implications of changing rules in our industry and the better REALTORS® who wish for accurate and professional representation will keep rising to the top.  Cutting corners on home measurment is what got us here in the first place.

Alongside title insurance, the real property report, your lawyer and your REALTOR®, sellers wishing to avoid lawsuits and protect themselves as much a possible in the biggest transaction of their lives, should hire a professional to measure their homes according to the Residential Measurement Standard, which is now the law in Alberta as of July 2016.

Here's a look at the chief principals:

1. Real estate professionals must use the RMS.

2. Identify if the measurement system is metric or imperial, and apply it consistently.

3. For detached properties, measure the property using the exterior wall at the foundation.

4. For properties with common walls, such as half-duplexes, townhouses, and apartments, measure the interior perimeter walls (paint-to-paint) at floor level. An additional area representation may be made assuming exterior measurements.

5. Include floor levels that are entirely above grade and exclude floor levels if any portion is below grade. Below grade levels may be measured, but the area must not be included in the RMS area.

6. Include all additions to the main structure and conversions of above grade areas within the structure if they are weatherproof and suitable for year-round use.

7. The property must have a minimum floor-to-ceiling height of 2.13 metres (7 feet). If the ceiling is sloped, the area with a floor-to-ceiling height of at least 1.52 metres (5 feet) is included in the RMS area, provided there is a ceiling height of 2.13 metres (7 feet) somewhere in the room.

8. Include extensions from the main structure that have a minimum floor-to-ceiling height of 1.5 metres (5 feet), such as cantilevers, bay and bow windows, and dormers.

9. Exclude open areas that have no floor, such as vaulted areas.

Due diligence with client representation
Seller and buyer representatives must explain to their clients:

  • the relationship between property size and value
  • all the factors that influence buyers when they decide to purchase a property
  • the different measurements such as RMS area, living space, above grade, below grade, registered condominium plan size, RPR measurement, etc.
  • if required, the different measurement approaches for detached and attached properties

Real estate is a service based business and over the years, the services of Real Estate Professionals has changed.  Consumers have been advocating for lower rates in commissions and certainly the offerings of discount brokerages has changes our contract wording as well as perception of the industry.  Did your comfree representative talk to you about the RMS, your liabilities and their responsibilites?  Probably not.  In fact, they probably also didn't explain to you that all buyers are under contract now and if you wish to sell you're probably going to have to pay the Buyers agents commission anyways.  But CAVEAT EMPTOR folks, you get what you pay for.

I see it all the time in this industry, cutting corners, REALTORS® working a lot of angles to get the business, but what happens AFTER you list. HA!  If only i could tell you all the things I've witnessed. #thingsThatMakeYouGoHmmm ...lol

Do yourself a favor, hire a professional REALTOR® and get your house professionally measured.  Contact me to save thousands on your next home sale.

Sincerely,

Jeanine

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