In BC, the risks of severe weather events, including flooding, landslides, and wildfires, have been increasing in recent years due to the effects of climate change. These events can be localized and catastrophic, like the Grouse Complex Wildfire which destroyed hundreds of homes in West Kelowna last August, or more generalized and profession-specific like the snap freeze event which has decimated the BC wine sector across the province in January 2024. 

In response to this increasing risk, the BC Financial Services Authority commissioned a whitepaper titled Natural Catastrophes and Climate-Related Risks (NCCR). This document outlines several profession approaches to climate change, aimed at enhancing resilience to these events for both brokerages and consumers. There are two key pillars to the NCCR: identifying the risks to business (including brokerages) due to climate change and protecting consumers through disclosure. This article focuses on the disclosure steps individual REALTORS® should take in response to this policy. While this whitepaper has not directly changed any of the Real Estate Service Rules, REALTORS® need to be mindful of how this broad policy will apply to their clients and customers. 

Role of the REALTOR®

In any real estate transaction, the REALTOR® is generally the person to whom the client or the customer is looking for answers and often assurance. REALTORS® would be well advised to avoid quantifying or minimizing a risk for the client, such as when responding to a question like, “How likely do you think it will be that this property could be affected by a flood?” A prudent REALTOR® would respond by providing resources to their client and not advice, by saying “I can’t assess that risk for you, but here is a copy of the 200-year flood map produced by the municipality, and I can set up an appointment with an insurance advisor to discuss how you can mitigate that risk.”

Communication with Clients

These questions can be difficult for REALTORS® when trying to manage these responses between clients and unrepresented parties. For clients, the REALTOR® as a fiduciary is required to be candid and fully disclose all information known to them (see Rule 30, Duties to Clients). However, REALTORS® also have obligations to unrepresented parties (eg, Rule 33, Duty to Act Honestly). Importantly, when faced with these difficult questions (that go beyond merely factual information) from unrepresented parties, it would be prudent to reply, “Let me take that question back to my client and get back to you” and reply within a reasonable time once you have had a chance to discuss the reply with both your client and potentially your managing broker and your client’s lawyer.  

Form of Disclosure

The NCCR did not introduce additional disclosure, however, it did signal that it is prudent for REALTORS® to have a broad, holistic, and regional view of disclosure as opposed to only focusing on the property that is the subject of the transaction. This disclosure will vary depending on property type or location and REALTORS® should be familiar with where to obtain that information from provincial and local government respecting those risks, for example, wildfire risk and flooding risk maps. Additional NCCR disclosure will not be required on every property in BC, as this will depend on the location, history, and available data mapping. 

How to Disclose

Where you have a property where disclosure would be prudent or required, disclosure should be made appropriately:

1. If a property has a “material latent defect” as defined by Rule 59 (note: most NCCR disclosures will not fall within this capacity), then the Seller’s REALTOR® must make the disclosure, in writing outside the contract or service agreement and prior to any agreement being entered into  and the contract must contain an acknowledgment of such disclosure;
2. For most NCCR disclosure, where it is not a “material latent defect” (discussed above) or “latent defect” (where disclosure is required by the seller at common law) then:
   1. Where the seller has chosen to make a preemptive disclosure (usually after consultation with their lawyer), then the disclosure should be part of the contract between the buyers and sellers (note: Seller’s licensees should not be making this disclosure prior to obtaining client permission). Although this disclosure may be made as part of the PDS, disclosure within the contract terms is the preferred approach;
   1. Where the Buyer’s REALTOR® wants to make the disclosure to their client (Rule 30(h) - duty to discover relevant facts), then the REALTOR® should do so with the Acknowledgment of Risk Form (or their brokerage form), and this disclosure should not form part of the Contract of Purchase and Sale. Some examples of these non-contractual disclosures may include: flooding covenants or wildfire covenants on title, advising clients to seek insurance prior to subject removal, and enclosures of flood or wildfire risk mapping. 

Only those items which are negotiated between the buyer and seller should form part of the Contract of Purchase and Sale. Clauses should not be inserted for the sole benefit of disclosure by the drafting Buyer’s REALTOR® (although this may be done by the Seller’s REALTOR®), such disclosure by the Buyer’s REALTOR® to their buyer clients should take place in writing outside the contract.  

REALTORS® need to ensure that their clients are educated to make informed decisions about the risks inherent in their real estate purchase. This is accomplished by taking a holistic view and prompt and proactive disclosure of risks inherent to both the property and the geographic area. For more on these issues, see Legally Speaking #561 on Wildfires and Climate Change.

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Without limiting the Terms of Use applicable to your use of BCREA's website and the information contained thereon, the information contained in BCREA’s Legally Speaking publications is prepared by external third-party contributors and provided for general informational purposes only. The information in BCREA’s Legally Speaking publications should not be considered legal advice, and BCREA does not intend for it to amount to advice on which you should rely. You should not, in any circumstances, rely on the legal information without first consulting with your lawyer about its accuracy and applicability. BCREA makes no representation about and has no responsibility to you or any other person for the accuracy, reliability or timeliness of the information supplied by any external third-party contributors.