Selling With an Open Property Standards Order in Ontario: What You Must Disclose, and Can the Buyer Still Walk

A municipal property standards order is not an open building permit. It is an enforcement order — and under the Building Code Act, once it is registered on title it travels with the house to the next owner. That single fact drives what you can hide, whether the buyer can back out, and how the money gets handled on closing.

I am Arthur Zhao. Sellers tend to panic in the wrong direction here. The moment they hear the city has an order on the house, the reaction is either “so I can’t sell it at all now” or “the buyer will never know if I stay quiet.” Both are wrong.

Whether you can sell is not the question — you can. The point is that the order does not vanish at closing; it follows the property to the next owner. And it gets constantly confused with a different thing — an open building permit — even though the two differ completely in legal character, consequence, and who ends up carrying it through the deal.

Below I start with the fact that surprises people most (the order runs with the land), then walk through what you actually have to disclose, whether the buyer can back out, and how the money is handled on closing day. The statute here is the Building Code Act, 1992; the municipal example is Toronto’s Municipal Code Chapter 629.

The order does not close when the deal closes

Start with the mechanic that catches sellers off guard: a property standards order can be registered on title, and when it is, it stops being just a matter between you and the city.

The load-bearing clause is provincial — Building Code Act, 1992, s.15.2(4). Registration is permissive rather than automatic: the municipality may register the order in the proper land registry office, and it is registration that makes the order attach to the property instead of to whoever happened to own it when the officer wrote it. From the moment the order sits on title, anyone who later acquires an interest in the land is deemed to have been served with it as of the day it was originally served. A purchaser therefore arrives already in the legal position of a party who has received the order; notice is imputed by statute, so a buyer’s later assertion that the order never reached them carries no weight. The statute supplies the exit as well: once the required work is done, the municipal clerk must promptly register a certificate confirming that the requirements have been satisfied, and that certificate operates as a discharge of the order.

Toronto’s Municipal Code writes the same mechanism into §629-49.1(D) and §629-49.4 — a visible municipal landing spot for the statute. Together this answers two of the article’s core questions: why the buyer’s lawyer sees it the moment they search, and how the order gets formally cleared before closing.

What you actually have to disclose — and what you don’t

Plenty of sellers believe an order must be advertised; that is not accurate. Others believe silence is safe; that is more dangerous. The real position sits between the two.

The default is caveat emptor — buyer beware. For problems a buyer can see or discover (patent defects), the law does not force a seller to speak up. But that rule has exceptions that bite hard on an order:

1. You are asked directly. You may not have to volunteer it, but once the buyer or their lawyer asks, you cannot lie or mislead — that is misrepresentation, a separate head of liability.
2. You complete an SPIS. The Seller Property Information Statement is voluntary in Ontario, but if you fill it out you must be truthful; getting it wrong or omitting a known order creates exposure rather than protection.
3. A dangerous latent defect you actively conceal. If the non-compliance makes the home unsafe or unfit and you deliberately hide it, caveat emptor will not save you.

And there is a practical reality on top of the law: once the order is on title under s.15.2(4), the buyer’s lawyer will see it on the search. So hiding it carries legal risk and usually fails anyway — “no general duty to disclose” is not the same as “silence is a safe strategy.”

Open building permit vs property standards order

Can the buyer still walk? It turns on the requisition clause

Say the buyer’s lawyer finds the registered order on the title search. What happens next?

The lawyer raises a requisition — a formal title objection — before the requisition date set in the agreement, demanding the order be cleared before closing. Whether the buyer can actually walk and recover the deposit depends on how the title-requisition clause in the Agreement of Purchase and Sale (APS) is written. The standard OREA form typically provides that, for a valid objection the buyer raises, if the seller is unable or unwilling to remove it and the buyer will not waive it, the agreement ends and the deposit is returned. It is not a free “buyer changed their mind” exit — it hangs on the objection being a valid one.

Watch a separate clock too. If you, the seller, want to challenge the order itself, you have 14 days after being served to appeal to the Property Standards Committee (s.15.3(1)), and another 14 days to appeal the committee’s decision to the Superior Court of Justice (s.15.3(4)). Miss the window and the order is deemed confirmed (s.15.3(2)) — final and binding (Toronto’s parallel is §629-49.2). If you are still weighing “fix it” against “fight it” while listing, that clock is already running.

Three ways this gets handled at closing

An open order does not have to sink the deal — it has to be built into the closing structure. In practice it is usually one of three routes:

1. Cure it first and get it discharged. You complete the work before closing, have the officer re-inspect, and obtain a certificate of compliance (s.15.5, which the owner may request on paying the municipality’s fee); if the order was registered on title, the clerk registers a certificate that the requirements are satisfied, discharging the order (s.15.2(4); Toronto §629-49.4). Cleanest path.

2. Adjust the price and let an informed buyer take it on. The buyer knows the house carries an order and understands the repair obligation and potential penalties that come with it, and you negotiate a credit or reduced price. The condition is that the buyer is genuinely informed and willing — not kept in the dark.

3. A closing holdback. The buyer’s lawyer holds back funds in trust and releases them to you once the work is done and the order is discharged. This is a practice, not a legal requirement — how much, and on what conditions it releases, are negotiated case by case between the lawyers. That is exactly why I will not give you a “usually X percent” figure here; it depends on what your order actually requires and on the deal.

What to do now

Three steps, in order.

1. Read the order itself, closely. It states what must be repaired, the compliance deadline, and the final date to appeal. Confirm whether it has already been registered on title under s.15.2(4) — that decides whether the buyer’s lawyer sees it the moment they search.

2. Decide “fix” or “fight,” and don’t let the 14-day clock run out. If you think the order is wrong, appeal to the Property Standards Committee within 14 days of service (s.15.3(1)); if it should be fixed, book the work early and aim to hold a certificate of compliance (s.15.5) before closing.

3. Get your lawyer in before you list. Have them design the disclosure approach, the relevant APS clauses, and the closing structure (cure / price adjustment / holdback) up front, instead of reacting once the buyer’s lawyer raises an objection.

One closing note: this article is general information, not legal advice. Disclosure duties, the buyer’s ability to walk, and how a closing is structured depend heavily on your specific facts and the wording of your contract — take anything involving a real decision to your Ontario real estate lawyer. I do not name or recommend any lawyer or municipal contractor.

Arthur Zhao

Real Estate Broker · FRI · ABR · SRS · PSA · MCNE · E-PRO · CLHMS & GUILD Elite · REAIS

VP & Branch Manager, Bay Street Group Inc.

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