MORTGAGEBROKER mbabc.ca summer 2015 | 37
propertydisclosure
Broker Beware
Property Disclosure Statements – unreliable even when available
A client Asks you to find a lender to
finance his new purchase. He is buying the
property from the seller without the use of
any real estate agents. e lender asks for a
Property Disclosure Statement (PDS) but the
seller is not willing to provide one. Is the seller
required to provide a PDS? What would a PDS
provide anyway? Who bears the risks in the
absence of a PDS?
What is a Property Disclosure
Statement?
e PDS is a form introduced by the BC
Real Estate Association in 1991. It contains a
series of questions and statements concerning
the state of the property being sold and
particularly is intended to have the seller
disclose defects known to the seller. It covers
such topics as buried fuel storage 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.
ere is a similar form regarding strata
properties (Strata Property Disclosure
Statement) covering condominium-specific
issues such as parking and storage allocations,
special assessments, restrictions on age, pets
or rentals, and building envelope problems.
ere is as well one for rural properties (Rural
Property Disclosure Statement) covering issues
related to rural land such as the quality of well
water, septic systems and flooding problems.
Can the buyer require that
the seller provide a PDS?
No, there is no requirement in law for the
seller to provide a PDS; however, all B.C.
real estate boards resolved to make the form
mandatory for properties listed on the Multiple
Listing Service. Having said that, the seller
may choose to cross the form out, thereby
including the form but making no meaningful
representation. e real estate agent is not
likely to be pleased by such an approach and
would likely encourage the seller to fill it out
as completely and accurately as they are able,
relying on the best of their knowledge. e
form should, where appropriate, indicate the
limitations of the seller's knowledge.
Who takes risks associated
with non-disclosure?
e general rule is buyer beware and so
non-disclosed matters are at the buyer's risk.
e onus rests upon a buyer to be reasonably
diligent, including making inquiries and
carrying out inspections regarding those
defects or conditions discoverable upon
reasonable inspection by a qualified person.
BY Ray Basi
are you
getting aLL
the facts in
your Property
Disclosure
statement?
