Property Disclosure Statements
Introduced in 1991 by the B.C. Real Estate Association (BCREA), these forms are intended to give buyers some peace of mind as to what they are buying, as sellers are asked to disclose truthfully and completely any defects that the property might have.
Also, the questions on this statement are meant to help protect the seller by establishing that all pertinent information had been disclosed to the buyer.
BCREA states that “the Residential PDS goes beyond current legal disclosure obligations and itemizes potential problems for prospective buyers, such as buried oil tanks, asbestos insulation, unauthorized rental suites, renovations done without a permit, moisture problems, unregistered easements or encroachments, and whether the home was ever used as a grow-op or drug lab.”
There are several versions of this form i.e. residential, condominium, and rural properties. Each version asks a series of questions relevant to these types of properties.
The Process:
The Seller fills out, dates and signs the PDS form at the same time they sign a Listing Contract with their REALTOR ® . Sellers should update the statement until the sale closes if new information becomes available. Each registered owner should sign the form to avoid any future conflict.
Prospective buyers will want to review the disclosure statement and/or will make an offer subject to their receiving and approving this form within a specified time.
Once approved, the buyer will sign the PDS as well.
Buyers Should Know:
If a seller is not willing to provide a PDS or a line has been drawn through the questions, a potential buyer should perhaps view this as a red flag. Of lesser concern are sellers that have never lived in the property for any length of time. This may be the case of an absentee landlord or estate sale and the sellers do not know enough about the condition of the property to comment.
Also, properties that are being foreclosed on by a Lender usually do not have a PDS available or if they do, they will have a slash through it. Buyers purchase on an “as is” basis and if defects become apparent at a later date, then the Buyer may only have himself/herself to blame.
The PDS should be incorporated into and form part of the Contract of Purchase and Sale so that its representations be considered terms of the contract.
Note:
A PDS does not guarantee a problem-free purchase. Some Sellers are not aware that their home has a defect and therefore, it would not be prudent to rely totally on the representations contained in this form.
While sellers are obliged to make full disclosure of latent defects, buyers are equally obliged by the Courts to exercise due diligence in investigating what they are proposing to buy . Caveat emptor or “buyer beware” is very much in evidence here.
Buyers are strongly advised to obtain an independent inspection of the home and property by a qualified house inspector as the PDS is just the first step in acquiring necessary information about the property.
These PDS forms are not a warranty for the future condition of the property. They simply
acknowledge what the Seller knows at the time of the sale. Relying on a claim for damages awarded by the courts based on the contents of a PDS form may prove to be frustrating and the outcome could be uncertain.
The objective of the form is to give the Buyers full disclosure of the home’s condition, divulge any known defects and to help prevent any future misunderstandings that could lead to a potential lawsuit.
