What is a PDS (property disclosure statement) and why everyone buying or selling Salt Spring real estate should 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.
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 makes 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 “airbags” in a car. Most people will never need their “airbags” 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 “airbags”. 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, where 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
The 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.
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.
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.
|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;
 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,  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,  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 your due diligence, do not rely on just the seller’s PDS, and hire professionals to inspect the home and or property.
Scott & June Simmons
The Salt Spring Team