Alex, a real estate salesperson at Prestige Homes Brokerage in Mississauga, is representing Samantha, a buyer, for a commercial property. During the due diligence period, Samantha discovers a restrictive covenant on the title that limits the use of the property to retail only, which conflicts with her plan to convert it into a restaurant. Alex, having reviewed the property's title and performed extensive checks, was aware of this covenant but forgot to explicitly bring it to Samantha's attention. What is Alex's legal and ethical obligation in this situation under TRESA?

Question: Alex, a real estate salesperson at Prestige Homes Brokerage in Mississauga, is representing Samantha, a buyer, for a commercial property. During the due diligence period, Samantha discovers a restrictive covenant on the title that limits the use of the property to retail only, which conflicts with her plan to convert it into a restaurant. Alex, having reviewed the property's title and performed extensive checks, was aware of this covenant but forgot to explicitly bring it to Samantha's attention. What is Alex's legal and ethical obligation in this situation under TRESA?

Answer options:

• Alex acted reasonably as Samantha's legal counsel should have identified the covenant. ✅ Alex has breached his duty of care and diligence to Samantha by failing to disclose a material fact known to him about the property, as per the Code of Ethics under TRESA, 2002.
• Alex is not responsible for legal aspects of the title; his role is limited to finding the property and negotiating the price.
• Alex should advise Samantha to proceed with the purchase and try to get the covenant removed after closing.

Correct answer: Alex has breached his duty of care and diligence to Samantha by failing to disclose a material fact known to him about the property, as per the Code of Ethics under TRESA, 2002.

Explanation: Under the Code of Ethics (O. Reg. 567/05) of the Trust in Real Estate Services Act, 2002 (TRESA), a registrant has a duty of care and diligence, which includes disclosing to their client all material facts that are known or ought to be known regarding the transaction or property. A restrictive covenant fundamentally impacting intended use is a material fact.