The Property Disclosure Statement in BC

What is a PDS (property disclosure statement) and why you should anyone buying or selling Salt Spring real estate care.  If you are selling think of the PDS as your trusted friend.  Just like a trusted friend you can and should tell all to the PDS.   The PDS will be there with you if you get into a sticky situation selling.  If you have never seen one here is an actual PDS, please note there is no address; example PDS .

Why do I need to fill one out if I’m selling?  You do not have to British Columbia doesn’t have a law requiring property sellers to complete the PDS, the REALTORS® of BC make the form available to sellers listing their home on the MLS®.  It is not mandatory but strongly suggested as best practice.  Think of it like “air bags” in a car.  Most people will never need their “air bags” well why put them in a car if most will not need them?  Well if that truck coming your way at high speed swerves into your lane you will be glad you had your “air bags”.   99.99% of real estate deals will never “need” a PDS but if you disclose chances are the buyers can not come back on you and take you to court.  Here is info about the latest court case, Nixon v. MacIver,  were the PDS was involved.  Info below is from the BCREA which I have been a member of for more than a decade:

PROPERTY DISCLOSURE STATEMENT TIPS

Mike ManganThe BC Court of Appeal recently decided Nixon v. MacIver, the court’s newest Property Disclosure Statement (PDS) case.1 Once again, the court held in favour of the sellers. It seems timely to offer a few PDS suggestions for licensees.

Listing REALTORS®

Why use a PDS? It makes sense that the seller, the person most familiar with the property, should inform potential buyers about his or her knowledge of it. The PDS gives every buyer the same starting point for inquiring about the property and reduces a Realtor’s risk of being sued for misrepresentation.

A seller may want advice when completing a PDS. Review the PDS instructions with the seller and remind the seller to honestly and fully complete it. Warn the seller against assuming or guessing. Say, “If you don’t know, you don’t know.” In Nixon, much of the dispute might have been avoided if the sellers, when completing their PDS, had not wrongly assumed the age of a roof. Even so, the court dismissed the claim against the sellers because they honestly believed their answer to be correct.

If the seller says, “I don’t understand this question,” consider simplifying the seller’s inquiry. You can ask, “What part of the question don’t you understand?” If the seller does not understand a particular word, consider consulting a dictionary together and always document the inquiry in your notes.

Suppose a Realtor gives a seller certain advice about filling in the PDS, but the seller rejects that advice? The Realtor should warn the seller about the risks of not following that advice and fully document the exchange.

If a Realtor believes that a seller’s answer is misleading or needs clarification, they should explain to the seller why. For example, where a seller describes his knowledge of water damage in the PDS as, “some.” In particular, beware the half-truth – the answer that mentions a real problem, but downplays its actual magnitude. Warn the seller that he or she may be sued for giving false or misleading information. If the seller refuses to correct a misleading answer, the Realtor should withdraw.

In a lawsuit, there may be a question whether the buyer relied on the PDS before making an offer. A listing Realtor should record when the PDS is delivered to the buyer or the buyer’s agent.

Buyer Agents

It is important to put the PDS into perspective for a buyer. The Nixon case emphasizes the buyer’s own obligation to investigate the property. Subject to a seller’s duty to disclose a latent defect, Nixon held that a seller who completes a PDS has no obligation to add extra information beyond answering the specific questions in the form. The court reiterated that the PDS only asks a seller to say if he or she is aware of certain problems. As the Real Estate Council of British Columbia says:2

“Realtors who act for buyers should caution their clients that questions on the PDS worded, ”Are you aware…” refer only to the present tense. A negative answer does not mean that there has not been a problem in the past or that a past problem will not recur.”

Incorporate the PDS into the contract. If a particular statement in that PDS is especially important to the buyer, add that the statement in question, “is a fundamental term of this contract.”

Remind the buyer of the importance of a professional inspection and have the buyer give a copy of the PDS to the inspector. The buyer can ask the inspector to note any discrepancies between what the inspector sees and what the PDS says or omits.

In contract law, a buyer may only rescind the contract for innocent misrepresentation by taking legal steps before completion. If a buyer discovers information that is inconsistent with the PDS, advise the buyer to immediately seek legal advice.

Mike Mangan
B.A., LL.B.

1. Nixon v. MacIver, 2016 BCCA 8 aff’g 2014 BCSC 533.
2. Real Estate Council of British Columbia, Professional Standards Manual, online: Trading Services, 4. General Information, (a) (xxii)(1)Disclosing Defects: How the Law Works:http://www.recbc.ca/psm/disclosing-defects-how-the-law-works.
“Copyright British Columbia Real Estate Association. Reprinted with permission.” BCREA makes no guarantees as to the accuracy or completeness of this information or the currency of legal information.

The court case is interesting to read over.  Here is what I think is the most interesting part about disclosure;

Disclosure statements

[48]        Information contained in a disclosure statement that is incorporated into a contract of purchase and sale may be a representation upon which a purchaser can rely: Ward v. Smith, 2001 BCSC 1366 (CanLII) at para. 31. However, a vendor is only obliged to disclose his or her current actual knowledge of the state of affairs of the property to the extent promised in the disclosure statement and need say “no more than that he or she is or is not aware of problems”: Arsenault v. Pederson, [1996] B.C.J. 1026 (QL) (S.C.) at para. 12. In other words, the vendor must correctly and honestly disclose his or her actual knowledge, but that knowledge does not have to be correct. A vendor is not required to warrant a certain state of affairs but only to put prospective purchasers on notice of any current known problems. The purpose of a disclosure statement is to identify any problems or concerns with the property, not to give detailed comments in answer to the questions posed. See Anderson v. Kibzey, [1996] B.C.J. No. 3008 (QL) (S.C.) at paras. 13-14;Zaenker v. Kirk (1999), 30 R.P.R. (3d) 9 (B.C.S.C.) at para. 19; Kiraly v. Fuchs, 2009 BCSC 654 (CanLII) at paras. 47, 49; and Roberts v. Hutton, 2013 BCSC 640 (CanLII) at para. 83.

 

So there you have it.  Please disclose all if you are selling.   Buyers please do you due diligence, do not rely on just the sellers PDS,  hire professionals to inspect the home and or property.

Cheers
Scott Simmons

Comments

  1. Maureen shack says

    My question is, we purchased a house 4 years ago. We had a home inspection done, the house passed with flying colours. Shortly after moving I , we noticed rodent droppings in the crawl space.
    We cleaned it up a few times when we discovered that there was constantly more . We called a rodent control company who did their part to help us. But the rodents are still coming in and always have been. I called our realator back recently letting her know of the situation. She said she would check with the sellers agent if the previous owner was aware of rodents. But we did find rodent traps in the crawl that were there when the inspector checked What can we do? Also no disclosure form.

    • Hi, Maureen, I’m not a lawyer and do not give legal advice but one would think after four years it’s now your problem and you should fix it for good. If there are any openings into the crawl space with a hole bigger than 1/4″ than you will get rodents. The first thing to think about is where is the food coming from for the rodents? Do you feed the birds? If you do you are feeding birds you are feeding the rats and or mice and it’s time to stop feeding them. All crawl spaces should have strong galvanized 1/4″ steel wire mesh covering all air holes and or vents. If it’s an open crawl space the wire should cover all the opening all the way around the home and be terminated at the ground with concrete. There is nothing worse than a crawl space that is infested with rats and or mice. This will get worse until you cut off their food and wire them out. Good luck with it cheers Scott.

  2. Hi Scott, you say, “Buyers please do you due diligence, do not rely on just the sellers PDS, hire professionals to inspect the home and or property” but we did due all our due diligence and hired a home inspector that was highly recommended and rated, and discovered within weeks of moving in that there was a major structural problem with the house that is clearly visible upon close inspection. The home inspector was completely incompetent and missed many other problems, and the sellers deny any knowledge. It has now been a couple of months since we discovered this problem. I know that we have up to 2 years to take the sellers to court, because we believe that they knew–from certain things that were done–and we are exploring all our options. My question is, is the previous listing agent from years ago (the agent who sold to the people who sold to us) allowed or obligated to share the property disclosure statement to us if we ask to see it? Is there any way we can find out if this structural problem was identified in previous sales of this house, and if so, who can tell us? We tried calling a couple of other home inspectors, but everyone is very reluctant to tell us anything.

    • Sorry to hear about the problems with this home. In regards to your question is allowed or obligated? I do not know of any reason he/she would be obligated to share with you. Allowed why not the PDS was in the public domain and if you did file against the owners you could probably get a court order to get a copy of it if they have it which would depend on how long it has been. Paper files are bulky and a pain to tote around I have boxes in my basement but could I find one PDS from years ago? Probably. Or just contact the people who sold the home to the present owners and ask them about the problems.

      Most homes built in most cities and or towns have had permits filed with the local government building inspection office. Depending on when the home was built the files might be on microfiche and you should be able to get complete access to the file. This will give you an insight as to when and if any work was done after the home was originally built. You might be able to find out the name of the builder and or anyone who renovated the home.

      The other option here is go chat with the neighbors they probably know the entire back story.

      Hope you get a resolution on this. Cheers Scott

  3. Thank you for your quick reply. Much appreciated.

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