Bedbugs a potential deal breaker for real estate transations in Toronto

Business Reporter

Tony Wong – July 6, 2010

It’s an occupational hazard Barry Lebow would rather do without.

Before entering a home to inspect it, the veteran real estate appraiser typically gives the butt of his jeans a quick dousing of bug spray.

“I promised myself that I wouldn’t bring home bedbugs again — that stuff is murder,” says Lebow of Lebow, Hicks Ltd. “We didn’t sleep for three weeks.”

Lebow says he once inspected a home in the Toronto area and ended up bringing home some of the tiny bugs. He ended up with welts all over.

Global travel and the reduction in the use of pesticides means bedbugs have made a resurgence worldwide.

The tiny pests are non-life threatening, but they can make life miserable for home owners.

In June, the William Osler Health Centre hospital reported a limited infestation with bugs found in the staff lounge and in parts of the emergency department. The report brought alarm from some patients worried they would end up taking the pests home with them.

Toronto’s public health department has said there has been a significant increase in the number of bedbug infestations in the city. Last year, city hall formed a committee to look at the problem.

There are currently five pilot projects aimed at reducing bedbugs in Toronto.

The problem has become so bad in some North American cities that in some areas, such as New York, homebuyers are putting bedbug clauses into their contracts, along with other clauses covering standard problems such as leaks, moulds, termites and whether the home has ever been a marijuana grow-op.

Bedbugs are a potential deal breaker for some real estate transactions.

Last year, residents at two Des Moines, Iowa, apartment buildings filed a $7.4 million (U.S.) class action suit against management for not doing enough to stop the problem. The suit asks for a ban on renting to future tenants unless management discloses the problem first.

So far, Toronto homebuyers haven’t reacted by putting bedbug conditions in offers, but some real estate insiders say it may only be a matter of time.

“I think it’s a great idea,” says Toronto real estate lawyer Bob Aaron. “Although the real estate industry may resist.”

Toronto real estate lawyer Audrey Loeb says she hasn’t heard about clients putting a no-bedbug clause in contracts, but “it would not surprise me if, in some of them, this becomes an issue.”

In the U.S., bedbugs have become a contentious issue in some cities, with websites such as devoted to tracking tenant and buyer issues.

In Chicago, one apartment building was sued by tenants on the grounds that the landlord did not disclose that a neighbouring apartment had bedbugs.

Given his previous experience, Lebow says he wouldn’t buy a home today without checking for bedbugs.

“This stuff is horrible. It’s really tough to get out of the home, and many times it’s not just a question of spraying,” said Lebow.

“And the problem is, if it’s in your house, you’re afraid to go visit someone else and bring it with you, because your whole family will be infected.”

Last month, Liberal MPP Mike Colle introduced private member’s legislation to protect tenants against the parasites. The legislation, if passed in the fall, would amend the 2006 Residential Tenancies Act to require landlords to disclose information with respect to the pests.

Waheed Ahmed, the owner of Pesticon Pest Control Inc., says many homeowners and agents are scared of having neighbours or potential clients know the home is infested.

“I used to have a very prominent sign on my van, but now they’re requesting that I come with an unmarked vehicle,” said Ahmed.

Two months ago, Ahmed switched to a magnetized sign for his van that he can remove when going to a job.

Ahmed also says hotel operators frequently request that he send their bill to a corporation number, and not include the hotel’s name.

“This is a funny business, but I guess it’s understandable,” Ahmed said.

His volume is up 20 per cent from last year. Ahmed charges $400 for a two bedroom house and $500 for a three bedroom. Business is so good that he recently bought the domain name and intends to start a separate division of his company.

“Bedbugs are tough on people because your life is a nightmare. It is like that movie called Sleeping With The Enemy; it affects you psychologically,” he said.

“It’s a war between you and something you can barely see.”

Putting bedbug conditions in an offer is the last thing many Toronto realtors want to see.

“We already have enough conditions on some of our sales as it is,” said Royal LePage agent Anna Cass. “We have to put so many disclosures into the sale it’s getting crazy. The next thing they’re going to want to put in is that there are no tornadoes in Toronto.

“No one wants to take responsibility for anything,” Cass said.

In 2003, bedbugs were not considered a problem in the city of Toronto, where only 46 cases were reported. By 2008, there were 1,500 infestations reported between March and October.

In a hot housing market, where some homes may have multiple offers, prospective buyers are often encouraged not to place conditions in their offers to purchase. Some even forgo housing inspections, which could cause problems down the road.

Bedbugs are just one more issue to worry about. And lawyer Aaron says the problem is proving that bedbugs existed in the building in the first place.

“The bugs could be here today and gone tomorrow, so it would be difficult to prove an infestation predated closing,” he said.

However, Lebow says if the vendor used an exterminator to rid the home of the pests, then there may be a paper trail to follow.

“Agents and vendors have been known to lie to close a sale. But if they went to a pest control agency, then you have them,” Lebow said. “I tell you, those things can really make your life hell.”

1 thought on “Bedbugs a potential deal breaker for real estate transations in Toronto

  1. Pingback: Landlord Relief – Residential Property Mangement – Toronto GTA » Landlord licensing in Toronto – An election issue?

Leave a Reply