Pyrite Clause and Percentage: Ban It!
(Update of the article published on August 7, 2002)
When a promise to purchase provides for a pyrite test and a real estate broker specifies a percentage above which the buyer can withdraw in the clause, the broker can be considered at fault professionally. This practice, which has often been reported to the Organization, presents a serious risk to clients.
It means that real estate brokers are arbitrarily establishing cut-off points - 10%, for example - and even stating that this is an OACIQ requirement. In fact, the Organization has never issued any guidelines in this regard. Real estate brokers are not competent to establish such points, which are not appropriate in any case for assessing risk resulting from the presence of pyrite.
The measurement method used - the petrographic expansion potential index (PEPI) (indice pétrographique du potentiel de gonflement) - is not a percentage but a scale ranging from 0 to 100, with 0 indicating zero potential and 100 an extremely high potential. As specified in the test method used for existing residential buildings (standard CTQ M-200) designed by the Comité technique québécois d'étude des problèmes de gonflement associés à la pyrite, “the index is used megascopically only and the expansion potential of materials should be determined, if necessary, by carrying out optical microscope tests and/or chemical analysis*.”
In addition, the PEPI is not the only factor to be considered. “The evaluation of a number of other factors (content and type of sulphides, chemical analyses, residual sulphide, age of building, thickness of the fill, concrete attacked by sulphate, etc.) is essential before a definite decision is made concerning the expansion potential of the fill.”
With a cut-off point 10 in a promise to purchase, for example, the buyer could withdraw if the report showed a PEPI of 15, even though the final conclusion, after all other factors are examined, is that no intervention or corrective action is required.
Annex – Expert report
The Organization prepared a recommended form (Annex – Expert report) which can be annexed to a promise to purchase when a pyrite expansion potential test is envisaged.
For more information, please read the following article: “Obligations of real estate brokers and agencies: High-risk areas for pyrite”.
* Test method used for existing residential buildings. Comité technique québécois d’étude des problèmes de gonflement associés à la pyrite, Protocol CTQ-M200, version 2.0, Québec, June 4, 2001, 47 p.