38 | summer 2015 mbabc.ca MORTGAGEBROKER
propertydisclosure
However, quite apart from a PDS, a seller
has an obligation to disclose latent defects
rendering a property dangerous or unfit for
habitation. A latent defect is one which could
not be discovered upon reasonable inspection
by a qualified person.
e concept of buyer beware also is set
aside if the seller makes false or fraudulent
statements. Whether a statement amounts
to fraud or misrepresentation very much
depends on the wording of the agreement. For
example if the seller indicates that the PDS is
completed to the best of the seller's knowledge
and it is in fact so, the buyer cannot later
complain that the seller should have found out
more. at is not to say that the buyer cannot
complain that the seller in fact knew more
and did not, contrary to the representation,
disclose the matter to the best of the seller's
knowledge. If the seller makes a fraudulent
PDS or misrepresents something on the PDS,
the seller risks being found liable for any losses
suffered by the buyer in consequence of the
false statement.
Takeaways
e seller has no obligation to provide a PDS.
If the property was listed on the multiple
listing service, the seller's real estate agent
should have a PDS, although it possibly will
not be fully or at all completed.
Regardless of whether or not there is a PDS,
the buyer should make all inquiries (such as
checking with the municipality as to permits),
inspections (such as building inspectors and
appraisers), and reviews of records (such as
Land Title Office records regarding easements,
rights of way and restrictions) he or she feels
are needed before entering into a binding
contract to purchase the property.
A PDS in hand and all of the due diligence
in the world will not remove all potential
disclosure issues; it will certainly reduce them
and, possibly, the accompanying costs.
A mortgage broker and any lenders to
whom the potential transaction is presented
have to exercise similar due diligence. Reliance
solely on a PDS is not recommended. e
generic questions are sometimes confusing for
sellers in specific circumstances; sometimes
the seller forgets to include a matter, and
sometimes the seller lies to get the deal done.
A mortgage broker and lender should make
lending decisions based on more reliable
information.
Do your own due diligence.
