What is the property disclosure statement?
In Greater Vancouver, this document is filled out by the seller, with the assistance of the realtor, and is called the “Property Disclosure Statement.” (PDS) The seller signs this prior to or upon listing the property, and then the buyer will review it either prior to writing an offer or upon an accepted offer. It reviews details about the property for sale such as whether it has even been a marijuana grow-op, whether there has been any history of flooding or insect infestation, when the hot water tank and roof were last replaced, and if there are any latent or patent defects.
Are there different types of disclosure forms?
Yes, depending on whether your property is residential detached, strata, or rural you will be presented to fill out a property disclosure form for your type of property. The reason for this is there are different questions or issues that will arrive based on the type of property you have. For example, condos will have restrictions based on the bylaws that are not applicable to residential detached homes.
The Property Disclosure Statement Form BC Residential covers matters with relation to single-family homes on land.
The Strata Property Disclosure Statement covers condominium-specific issues such as parking and storage allocations, special assessments, restrictions on age, pets or rentals and building envelope problems.
The Rural Property Disclosure Statement identifies issues related to rural land, such as the quality of well water, septic systems and flooding problems.
What are the different types of defects I need to disclose?
Patent defects are defects that are visible to the human eye – ones that you can see. Patent (also known as physical defects) would be like a scratch on the hardwood floors, a missing door knob, or a hole in the wall. These are not required to be disclosed in the property disclosure statement, as you “buy what you see.” However, the seller cannot intentionally conceal a patent defect. This is why it is always helpful to have an inspection, as they are a second look by an experienced professional. If the inspector does find major physical defects, then you have the option to back out of the deal, ask the seller to fix them prior to completion, or accept the defect and fix it yourself.
Latent defects are typically a much larger issue than patent defects, as by definition they are not seen under normal inspections. It might be something in the foundation, or behind the walls that are hidden. The law states that if the seller is aware of the latent defect and it would either make the home inhabitable; threaten the buyers health or safety; or be unfit for the Buyer’s intended purpose then the seller must disclose this defect.
Sellers – a general rule of thumb – if you don’t know whether you should disclose it, then you probably should.
What are some examples of what I need to disclose?
So, this brings us to some examples of what should the seller disclose that they may not be so sure of:
- Every time it rains you have to fill your home with buckets to avoid flooding.
- You have a couple furry rodent friends living in your crawl space. I.e. your home has previously been infested by rats.
- Someone has died in the house.
- That your beautiful new balcony was extended without building permits.
- That your suite is illegal, and your neighbours have threatened to call the city to have them removed. (true story)
- The foundation of your home is cracking.
- There’s a recovering pedophile center across the street with regular meetings (Yes, you should also disclose areas surrounding your neighbourhood that may seriously affect the value of your property or health/safety of the buyers. Unfortunately, this is also a true story and the buyer’s had 2 young kids.)
Don’t forget to incorporate the PDS in to the contract.
It is extremely important to make sure that the buyer’s agent ALWAYS incorporates the property disclosure statement in to the contract so that the seller is liable, by contract, for the truth of his or her answers.
The property disclosure statement is almost always a subject that is required to be reviewed, and subsequently removed upon approval, in order for the deal to become “firm” and the deposit due. However, we have experienced some agents forgetting to add that “if removed, the property disclosure statement will be incorporated and form a part of this contract.”
“Disclose, disclose, disclose”
This is also very important for sellers. Completing a PDS can save you a lot of headaches if you can prove that you’ve disclosed everything you know about your home, and that the buyer signed off on it. The point is, the SAFEST route of action for any seller is to DISCLOSE, DISCLOSE, DISCLOSE. Odds are, the buyers will find out somehow, someway, sometime. If you were buying your own property, you would want the same respect paid to you.