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Licensed REALTOR® in Victoria, BC with Pemberton Holmes + Mavrikos Collective

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What Is A Property Disclosure Statement?

A Property Disclosure Statement (PDS) is a required document that is filled out by the seller(s) prior to listing their property on the MLS. The PDS gives the seller(s) an opportunity to disclose details about their home to prospective purchasers. The British Columbia Real Estate Association developed The Property Disclosure Statement. As of September 1st, 1993, it became mandatory that all Multiple Listing Service (MLS) residential listings include a Property Disclosure Statement.

 

On the PDS, a seller has an opportunity to disclose any latent defects or issues with their property that a prospective purchaser may not be aware of just by looking at it. While the Property Disclosure Statement is a good starting point, a potential buyer should investigate further based on what is important to them.

 

The PDS provides a written record as to what was disclosed at the time of the contract of purchase and sale.

 

There are two types of defects: patent defects and latent defects

A latent defect is a hidden or concealed defect that would not be discovered during a walk through but affects the property’s use or value. If the seller is aware of a latent defect, they must disclose it on the Property Disclosure Statement. In some cases (if not disclosed on the PDS), the seller may need to include a separate addendum to disclose material latent defects before an offer is presented.

 

Alternatively, a patent defect is a defect that is visible or which can be discovered during a visit to the property. For instance, if during a showing, you see stains on the ceiling from a recent roof leak. Naturally, since you can see the water stains, you would investigate it further to know the extent of the damage.

 

Below are just a few examples of items that a seller should disclose in the Property Disclosure Statement:

  • Repairs or renovations that were done without a permit
  • Wiring and plumbing that is not up to code
  • Termites or other pests
  • The presence of mould, underground storage tanks, or knob and tube wiring
  • Water damage from windows, doors, or the roof

 

There are four different options of Property Disclosure Statements a licensee could use depending on the property type. The four different options are Residential, Rural property – Land and Building, Rural property – Land Only, and Strata Title Properties. For instance, when listing a condo, townhome, or duplex, you would use the Property Disclosure Statement – Strata Title Properties.

 

Advantages For Sellers

The seller should ideally know his or her property better than anyone else. A seller should disclose all relevant information that he or she is aware of at the time of the disclosure. A seller can answer either yes, no, do not know, or does not apply to the questions on the Property Disclosure Statement.

 

It’s essential to be honest when filling out the PDS. Otherwise, a seller could be liable after closing if the buyer finds out that the seller was aware of a problem and tried to conceal it. For instance, if you were aware that your home had a cracked foundation but you didn’t disclose it on the PDS.

 

Examples of questions listed on a Property Disclosure Statement

  • Are you aware of any encroachments, unregistered easements or unregistered rights-of-way?
  • Are you aware of any past or present underground oil storage tank(s) on the premises?
  • To the best of your knowledge, is the ceiling insulated?
  • Has a final building inspection been approved or a final occupancy permit been obtained?
  • Do the premises contain unauthorized accommodation?

 

Advantages For Buyers

As mentioned previously, a Property Disclosure Statement must be included in the MLS listing. Therefore, a prospective purchaser will have the opportunity before writing an offer to review the PDS. The purchaser can then use the PDS as a guide to complete their due diligence after an accepted offer. Also, they will have time to investigate the seller’s representations more thoroughly. A buyer should always schedule an inspection of the home with a qualified home inspector. Regardless of whether the PDS has been filled in or crossed out.

 

A buyer can make his or her offer subject to reviewing and approving the property disclosure statement. It is in the buyer’s best interest to incorporate the Property Disclosure Statement into the contract of purchase and sale. If accepted, and agreed to by the parties, the PDS will form part of the contract of purchase and sale. If the parties to the contract are in agreement, any representations made in the property disclosure statement will survive the completion of the contract.

 

FAQ’s About the Property Disclosure Statement

Below are a couple of commonly asked questions about the Property Disclosure Statement:

 

What if the sellers have no real knowledge of the property? For example, an owner who rents out their property long term.

If the seller does not have any knowledge of the property, they can put a line through the PDS and sign at the bottom of the page. There is space in the additional comments section where a seller can further explain why they chose to cross it out.

 

Will the PDS automatically become part of the Contract of Purchase and Sale?

No, it doesn’t, all parties to the contract must intend for the PDS to become a part of the contract of purchase and sale. If the PDS forms part of the contract of purchase and sale, all answers filled out on the form becomes a warranty that survives the completion date.

 

Thanks for reading along! I hope that helped to answer some of your questions.

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August 14, 2020

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