A Property Disclosure Statement (PDS) is a required document filled out by the seller(s) before listing their residential property on the MLS®.
The listing agent will upload the disclosure statement online for buyer’s agents and their clients to view. The PDS can give potential home buyers an insight into the condition of the property and anything that may negatively affect the home’s value.
The PDS allows the seller(s) 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, all Multiple Listing Service (MLS®) residential listings became mandatory to include a Property Disclosure Statement, even if it is crossed out.
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 the home.
While the Property Disclosure Statement is a good starting point, a potential buyer should investigate further based on what is important to them.
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 all known defects in 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 by potential buyers. A latent defect is something that could make the home dangerous or unfit for habitation.
Alternatively, a patent defect is a defect that is visible or which can be discovered during a visit to the property.
For instance, if you see stains on the ceiling during a showing 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.
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 use the Property Disclosure Statement – Strata Title Properties.
The seller should ideally know their property better than anyone else. A seller should understand their disclosure requirements and disclose all relevant information and any major issues they are 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 tries 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.
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 and their real estate agent 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. The inspection report will detail the items on the disclosure statement and more known information about the property.
A buyer can make their offer subject to reviewing and approving the property disclosure statement or, even better, subject to a home inspection. Therefore, 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.
Below are a couple of commonly asked questions about the Property Disclosure Statement:
For example, an owner who rents out their property long-term?
If the seller does not know 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.
No, it doesn’t. All parties to the contract must intend for the PDS to become a part of the purchase agreement. If the PDS forms part of the real estate contract, all answers filled out on the form become a warranty that survives the completion date.
*Disclaimer: The topics of discussion, content and resources on this website are general information that may not be the right solution or advice for you specifically. Not intended to solicit buyers or sellers currently under contract with a brokerage.
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