The Property Disclosure Statement: What BC Sellers Must Disclose About Defects

When you list a home in BC, your realtor will usually ask you to complete a property disclosure statement. It looks like a simple questionnaire, but the answers can matter long after the sale closes.

Buyers who find a problem after moving in often start with what the seller said on that form. Knowing what you must disclose, and how to answer honestly without guessing, protects you and keeps the sale on track.

What the property disclosure statement is

The property disclosure statement is a standard form used in most BC resale transactions. It asks the seller about the property's condition and history, such as leaks, renovations and permits, drainage, pests and services.

BCFSA's guidance does not describe the form as mandatory. It notes that most sellers use it and encourages sellers to complete it accurately. In practice, many buyers make their offer conditional on receiving a completed statement, and a seller who declines may find buyers treat that as a reason for extra caution.

Your answers can become part of the deal

If the buyer's contract incorporates the disclosure statement, your answers become representations the buyer is entitled to rely on. The BC Court of Appeal has treated those answers as statements of the seller's current actual knowledge, not a warranty that the house is free of problems (Nixon v. MacIver, 2016 BCCA 8).

That cuts both ways. A seller who honestly did not know about a problem is generally not liable just because an answer turns out to be wrong. But a seller who knew about a problem and answered "no", or played it down, may face a claim for misrepresentation after completion.

What a seller must disclose, even if not asked

BC still starts from the principle of "buyer beware": the buyer is expected to inspect and ask questions. Within that rule, the law distinguishes between two kinds of defects.

• Patent defects are ones a reasonable inspection would reveal, such as a cracked window or worn flooring. A seller generally does not have to point these out, but must not hide them or make false statements about them.
• Latent defects cannot be discovered on a reasonable inspection. BC courts have held that a seller must disclose a known latent defect that makes the property dangerous or unfit for habitation (Cardwell v. Perthen, 2007 BCCA 313; Nixon v. MacIver, 2016 BCCA 8). BCFSA's consumer guidance says sellers must disclose all known material latent defects to a potential buyer, in writing.

Active concealment changes the picture. Painting over a water stain, covering a crack or removing evidence of pests can expose a seller to liability even for a problem a buyer might otherwise have been expected to find.

Your realtor has disclosure duties too

Section 59 of the Real Estate Services Rules requires a licensee acting for a seller to disclose to the other parties, before any agreement is made, any material latent defect the licensee knows about. The rule defines a material latent defect broadly. It includes defects that make the property dangerous, unfit for habitation, or unfit for a purpose the buyer has made known, defects that would be very expensive to fix, a problem that a local government has given notice must or should be fixed, and a lack of the proper municipal building and other permits.

If you tell your realtor about a defect like this and ask them to keep quiet, the rule requires them to stop acting for you on the sale. Telling your realtor is not a way to keep something confidential.

How to answer the questions carefully

A few habits make the form much safer to complete:

• Answer from what you actually know. Do not guess at dates, contractors or causes. If you are not sure, say so.
• Use "do not know" honestly. It is the right answer when it is true, such as for an estate selling a home the executor never lived in. It is not a way to avoid an awkward question.
• Explain past problems. A leak that was repaired is still history the buyer will care about. Say what happened, what was done and when, and keep the invoices.
• Be careful with renovations. Work done without permits is a common source of disputes. If you are unsure whether a permit was obtained, say that.
• Update the buyer if something changes. A new leak or notice from the city before completion should be raised with your realtor and lawyer promptly.

Stigmas: deaths, crimes and similar concerns

Some buyer concerns have nothing to do with the structure, such as a death in the home or a belief that a house is unlucky. BCFSA's guidance is that sellers are not obliged to disclose a stigma unless asked. If a buyer does ask, answer truthfully. A false or misleading answer can give the buyer a claim.

If a dispute arises after completion

When a buyer believes something was hidden, the dispute usually turns on what the seller knew, what the form said and what a reasonable inspection would have shown. Our article on hidden defects after buying a home in BC explains the buyer's side of the same rules. If you receive a demand letter, get advice before you reply.

Not sure how to answer a disclosure question? Ask before you list

Our real estate lawyers can review your draft answers and the history of the property, explain what must be disclosed, and act for you on the sale through to completion.

Call 604-259-2844 or send us a message to arrange a consultation at our Vancouver office.