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Disclosure of Defects - Real Estate Transactions

A seller of a home in Saskatchewan has a legal obligation to disclose certain defects in the property, but not all. If you have a question about your legal obligation to disclose, you should hire a lawyer in your jurisdiction for specific legal advice on your situation. Every case can be different. However, keeping in mind that there may be exceptions, the general rule in Saskatchewan was set out by Mr. Justice Klebec in the Saskatchewan Court of Queen's Bench decision of McMillan v. Green 2005 SKQB 382 (QB05347 JC Saskatoon). It can be summarized as follows:

  • The general rule in the purchase of property is "caveat emptor". This roughly translates to "buyer beware". In addition, most offers to purchase state that the buyer is purchasing the property "as is" except for any warranties or representations that are specfically set out in the agreement. For that reason, a buyer should not rely on verbal statements made by a seller. They should be set out in writing in the offer to purchase.

  • A seller must disclose "latent" defects in a property that they are aware of. A latent defect is one that is not discoverable by mere observation upon a reasonable inspection of a property. If the seller is aware of such a defect, then he or she is obligated to disclose it to the buyer. If the seller is not aware of it, then there of course is no obligation to disclose.

  • If a vendor fails to disclose or conceals a latent defect that they have knowledge of, this will set aside the rule of caveat emptor and entitle the purchaser to rescind its purchase contract with the vendor or to recover damages resulting from the vendor's failure to disclose. Anyone intending to rescind a contract for this reason should hire a lawyer for specific legal advice without delay or the remedy available may be affected.

  • Silence by the vendor regarding a known major latent defect is equivalent to an intention to deceive.

  • Defects that can be discovered by observation upon a reasonable inspection of a property are known as "patent" defects. The seller is not obligated to disclose them as they are self evident on a reasonable inspection. This assumes that the seller has not taken steps to conceal the patent defect. Missing shingles on a roof, stains on a carpet or marks on the wall are likely all examples of patent defects. There is no remedy against a seller for these items if the purchaser failed to notice them until after moving in, so long as they were there at the time the offer to purchase was signed.

    I have included a Statement of Disclosure as one of the conditions a buyer can choose when completing my standard Offer to Purchase agreement. I strongly recommend that it be used. Keep in mind that it cannot cover every imaginable defect a property may have. For that reason, a buyer still needs to make their own careful enquiries and inspection and should seriously consider obtaining a professional home inspection as another condition under the Offer.

    Partial or Deceptive Disclosure is Probably Not Disclosure

    Someone may know they are obligated to disclose a latent defect but they may want to play it down or they may want to disclose it in a manner that is not frank and open. That may be the equivalent of non-disclosure. See: Hancock v. Richardson, 2012 SKPC 132 - Provincial Court, Whelan, August 20, 2012 (PC12129)

    Condition of Home on Possession Date

    I don't hear specific complaints that often, but sometimes a seller does not leave a home in as clean condition as was anticipated by the purchaser. It should be a matter of common courtesy to clean and vacuum a home before moving out. However, sometimes the seller does not do so. Sometimes there is a difference of opinion between the buyer and seller as to what this should require. At first, it seems that one could simply insert a clause in the offer stating that the seller must thoroughly clean the home before leaving. Unfortunately, many people would have different interpretations as to what is required. If a disappointed buyer took the sellers to small claims court over such a clause, the court might find the clause to be void for uncertainty because it does not sufficiently specify what must be done and against what standard it is to be measured. Attempting to draft a clause with sufficient detail as to expectations is also virtually impossible as some would find the standards either too onerous or not onerous enough. For that reason, lawyers and realtors typically have not made this a written term of an offer. It has been left as a matter of expected courtesy rather than a contractual obligation. If you have specific concerns about a home you are purchasing, you may want to discuss this with the seller (or the realtors) for a solution to your situation. However, you should probably assume that a home will not likely be left any cleaner than it was at the time of viewing and take any related concerns into account in determining what amount should be offered for the home. A lower price can serve as compensation for the extra work likely involved at the time of possession. My offer to purchase form includes words to the effect that the buyer is entitled to receive the Property "in substantially the same condition as it is at the date this Offer is presented to the Vendors."



    Notice: The information on this website is general in nature only. It relates to Saskatchewan, Canada and may not be applicable in your jurisdiction. It does not constitute legal advice to you and no solicitor client relationship will be established. You should seek specific legal advice regarding your circumstances from a lawyer entitled to practise law in your jurisdiction.

    www.rickcarlson.com | Thu, 23 Mar 2017 17:12:00 CDT1