What must you disclose when selling a home?
The short answer is that while a seller’s disclosure obligations are limited, there are certain details that are required to be shared, according to provincial laws.
These disclosure details depend on the nature of any potential defects the home may have.
Specifically, Ontario law differentiates between two types of defects. These are patent defects — problems with a home that are visible to the buyer or to a property or home inspector — and latent defects which are problems that are not easily detectable, even by an expert.
Patent defects are usually easy to see, which is why it is not the seller’s responsibility to disclose them to buyers. Visible cracks in a foundation wall, missing safety railings or stains that suggest a roof leak, are all examples of patent defects. It is the buyer’s responsibility to look carefully, do their research, ask specific questions and have the home inspected, if necessary, depending on the intended use of the property.
On the other hand, latent defects are not obvious and may be challenging to discover, even by a home inspector or other expert. Examples of latent defects include a basement that floods during heavy rainfalls, a major structural problem, hidden fire damage or mould. If a seller is aware of such a defect and doesn’t disclose it, they can be exposed to a lawsuit by the buyer — especially if the defect makes a property dangerous or unfit for occupancy.
There are also some types of defects that can be more difficult to categorize. For instance, if the home has a visible crack in the basement foundation where water could leak through, disclosure may not be required.
If you’re a buyer interested in a property, I recommend that you ask your real estate agent to take all the necessary measures to find out as much as possible about the home to avoid any surprises later.
One way your agent can do this is by asking the seller’s representative specific questions about the existence of any potential latent defects. While listing agents are required to follow the seller’s instructions, they also have to follow a code of ethics that forbids them from knowingly misrepresenting the state of a home.
The information you receive may influence your decision to buy, the amount you offer, and any conditions you may choose to include in the agreement of purchase and sale.
I always think it’s a good idea to get your own home inspection. Seek the expertise of an experienced home inspector, especially one who is familiar with common issues in the neighbourhood you’re hoping to live in. Depending on your situation, a licensed contractor or professional engineer can also usually identify defects with the home’s major systems.
Remember that each home-buying experience is unique, and an informed buyer is a confident buyer. If your agent cannot address your questions or concerns, they can seek out the necessary expertise. You will also want to consider consulting with a lawyer who in insured to practise real estate law.
This column is for general information purposes only and is not meant as legal or professional advice on real estate transactions.
Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO). He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at http://www.youtube.com/RECOhelps.