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What you don't know will hurt you
Inman News Features - 10/21/2002

They say that what you don't know won't hurt you. This may be so in some cases. But home sellers who take this attitude could end up in court, depending on where they're selling.

Province laws vary regarding what sellers need to disclose to buyers when they sell. Some provinces, require sellers to complete a Real Estate Transfer Disclosure Statement. In other provinces seller disclosures are voluntary. And some provinces don't require seller disclosures at all, except as mandated by federal law, such as for lead-based paint and flood hazard zone disclosures.

Even if you're not explicitly required to disclose defects in your home to a prospective buyer, it may be wise to do so. Thirty years ago, sellers weren't required to disclose defects and buyers were warned to "beware." In today's consumer-conscious, litigious-prone society, "seller beware" is the more appropriate admonition.

Sellers, even in provinces where seller disclosures are required, are sometimes less than forthright with their disclosures because they fear the information will impede the sale of their property. This rarely happens. Buyers would rather know about defects before rather than after they complete the purchase. Lawsuits often arise when the buyers discover defects after closing that they're sure the sellers were aware of, but did not divulge.

Keep in mind that there's always the possibility that what you don't disclose, your friendly neighbour will disclose for you. Gregarious neighbours love to introduce new homeowners to neighbourhood secrets.

One seller didn't disclose to the buyer that a murder occurred on the property several years before. In short order, the neighbours made sure that the new owner was made aware of this fact. Sellers are required to disclose if a death occurred on the property within the last three years.

Another new homeowner discovered a drainage problem during the first rainy season after she bought her house. She referred to the seller's disclosure statement. The seller had answered "no" to the question asking about drainage problems. Later in a conversation with the next-door neighbour, the new homeowner was told that the downstairs of her house had routinely flooded every rainy season.

Another seller failed to disclose to a buyer that his roof was old and needed replacing. The buyer's home inspector asked the seller if he had experienced any roof problems. The seller said that he had not. After closing, the buyer became chummy with a neighbour. The neighbour told him that the seller had received replacement bids from three different roofers. He had been planning to replace the roof before the next rainy season.

HOME SELLER TIP: Intentionally withholding material information about a property when you sell can have serious consequences. Before you sell, make sure you understand your disclosure responsibilities. Your real estate agent or a real estate attorney can provide you with this information.

Don't be afraid of disclosing information about your property. Disclosure laws were created to protect buyers, but they also protect sellers. If all the known information about a property is revealed upfront, you're less likely to be involved in an after-closing dispute.

It's also a good idea to make old inspection reports and estimates for work available to the buyer. One seller disclosed that his furnace was in good condition. After closing, the buyers called a local furnace contractor for a routine maintenance. It turned out that the furnace contractor had inspected the furnace for the previous owner, and recommended replacing the furnace because of a dangerous condition.

THE CLOSING: The buyers made a claim against the seller who ended up paying for a new furnace.

Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers," and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.


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