These guidelines will assist you in understanding how to broach the subject of radon, and radon testing and remediation with your clients, and when disclosures must be made to all parties to a transaction.
- Advise sellers and landlords that radon levels of 200 Bq/m3 or more constitute a material latent defect and must be disclosed to buyers and tenants
- Advise your buyer or tenant client of the importance of radon testing
Advise sellers and landlords that radon levels of 200 Bq/m3 or more constitute a material latent defect and must be disclosed to buyers and tenants
If you learn from the seller or landlord that the home has been tested and the radon levels exceed 200 Bq/m³, this is a material latent defect and you must disclose this information to potential buyers or tenants. To facilitate this, the seller can use a property disclosure statement, such as the one developed by the BC Real Estate Association, which has questions about radon so that sellers can make the necessary disclosures.
It is prudent, if you are working as a buyer’s agent, to ask the seller or listing agent if a radon test has been completed, and if so, to see the results.
Questions you should ask your seller or landlord client include:
- Have you tested your property for radon?
- If so, were the test results provided by a C-NRPP licensed laboratory?
- If yes, may I have a copy of the results to see if they are above the 200 Bq/m³ threshold?
- If the results were over 200 Bq/m3, have you undertaken remediation activities?
Advising your property owner client to conduct a radon test (where possible) before marketing their home is important. This often may not be possible given the time that testing takes, so make sure that you discuss with your client options buyers may use if an offer is made, such as holdbacks for testing and remediation. It is becoming more common for buyers and tenants to ask if a radon test has been completed in a home they are considering for purchase or lease.
If your seller client has not conducted a radon test, buyers may propose a holdback clause, allowing for a radon test to be completed after the property transfers. If a buyer proposes a hold back, it is in your seller client’s best interest to ensure the clause includes a specified period of time, and what the threshold for radon will be in order for the buyer to claim the funds.
As a representative of a buyer, or a tenant, you have a duty to discover facts about a property that may impact your client’s interest in purchasing or leasing it. This includes advising clients on whether the property represents an increased risk of high levels of radon.
- a radon test shows that there are high levels of radon in the property; or
- a radon test has not been done.
If your client is concerned about the health risks related to radon, you should advise them to undertake testing.
Your buyer may decide that due to the relatively low cost of remediation, they are not bothered by high levels of radon or may not care if no radon test has been completed. Alternatively, they may be uncomfortable moving forward with the purchase or lease of the property or may request that a holdback be included in the offer to cover the cost of the test and any remediation that may be necessary. You should advise your client of the risks of not having a radon test complete and suggest that they have one after the completion of the transaction. Getting your discussion about radon testing and your clients wishes in writing is always a good idea.
You may also discover that a radon test was completed and came back below the 200 Bq/m³ threshold but that the test was done on the main floor of the home because none of the current residents occupied the basement for extended periods of time. If your client plans on using a bedroom in the basement, they may wish to have another test done in the basement to ensure levels of radon down there are still below the threshold for remediation. In that case, a holdback may be an appropriate option.
In cases where a test has not been completed and your client wishes to undertake testing, you may advise your client to include a holdback in their offer so that a radon test can be completed after the property transfers. The holdback clause drafted by a buyer/tenant or their real estate professional should provide for a release of funds in a specified period of time and should indicate what the threshold for radon will be in order for the buyer to claim the funds. Because commercial transactions generally take significantly longer to complete, radon testing may be possible during the subject removal period.
Some of considerations you should discuss with your buyer include:
- Whether to ask a seller about radon testing and whether to request a copy of any test results.
- If testing has been done, whether the test results were provided by a C-NRPP licensed laboratory.
- Whether to request a holdback or price reduction if radon levels exceed 200 Bq/m³ or if a test has not been completed.
- Whether the property has been roughed in for radon remediation.
When working with tenants they may decide that they do not wish to rent a property where radon testing has not been completed or remediation has not been done when the test results were high. Knowing how your tenant client feels about radon before beginning the property search will provide you the information you need to ensure you find a property that meets their search criteria.
As a managing broker you must understand the implications of high levels of radon on a property and its inhabitants. Levels of radon over 200 Bq/m³ are considered a material latent defect under RESA, and the same obligations to disclose exist as with all other material latent defects.
It is important to ensure that real estate professionals at your brokerage understand what radon is, when it must be disclosed, and how to determine what type of testing should be done.
You should also advise your real estate professionals that once a property has been remediated, the previous radon level is no longer considered a material latent defect and therefore does not have to be voluntarily disclosed. This does not mean that because the remediation has been conducted that the levels will always stay below 200 bq/m3, Health Canada recommends that retesting should be conducted every few years, or if a major home renovation takes place.
With that understood, all real estate professionals must still answer questions from buyers and their representatives honestly so if the question about whether the property ever had high levels of radon is asked, the only option to is to provide a truthful response or, if the client prefers, refuse to answer the question.
Material latent defect: means a latent defect that cannot be discerned through a reasonable inspection of the property, including any of the following:
(a) a defect that renders the real estate:
a. dangerous or potentially dangerous to the occupants; b. unfit for habitation; or b. unfit for the purpose for which a party is acquiring it, if; i. the party has made this purpose known to the licensee, or ii. the licensee has otherwise become aware of this purpose;(b) a defect that would involve great expense to remedy;
(d) a lack of appropriate municipal building and other permits respecting the real estate.
*RECBC would like to thank Real Estate Council of Alberta, Health Canada, and Radon Environmental for providing information used in this guide.