What Disclosure Is A Seller Legally Obliged To Make When Selling Their Property

Basement flooding. Mould behind the walls. Cracks in the foundation. These are just some of the surprises that home buyers across Canada have discovered in their property after closing, which were not disclosed by the seller. 

There are two kinds of defects; patent defects and latent defects. 

A patent defect is a defect that is obvious when you walk into the home; for example a broken window. The buyer cannot complain about this defect because they can easily see it when viewing the home. They are thus governed by the legal doctrine of caveat emptor or buyer beware, and have to accept these defects on closing, unless they include a clause in their agreement that the seller will repair the defect.

A latent defect is hidden and cannot be observed on a normal inspection. The law here is that if the seller knows about a latent defect that makes the home either uninhabitable by the buyer, unfit for the buyer’s intended purpose or dangerous, then the seller must disclose this defect to the buyer. In addition, the seller cannot intentionally conceal what would otherwise be a patent defect. Examples of latent defects that should be disclosed include a problem with the foundation, an illegal basement apartment or a serious basement or roof water problem that has not been repaired.

Just be aware that as the seller you can be held liable for the buyer’s damages when problems are discovered after closing if its proved that you would have been aware of the serious latent defect and didn't disclose it.  

Completing a Seller’s Property Information Statement, or SPIS thoroughly and honestly is what you will be required to do.  In not completing it, it raises suspicion and a buyer may low ball any offer on your property or may even choose not to offer at all; it gives the impression that you have something to hide.  PLUS in some situations, this form can actually save a seller from being liable.  If a defect is noted on this form by the seller and the buyer fails to investigate further, technically the seller disclosed the issue, whether or not the issue ends up being a much bigger problem after closing is now irrelevant.  The buyer will have a hard job coming back to the seller for any money.   

Honesty is always the best policy, especially when it comes to selling your home.  Just remember that for buyers, it's Buyers Beware, for sellers, its Liars Beware.