Last month a house sale fell through in Vancouver but somehow made national news. The big deal other than the $6.1 million dollar price tag? A gang- related murder of the sellers’ son took place on the sidewalk in front of the mansion. The sellers neglected to mention this tidbit during negotiations. The original ruling found that the sellers had hidden a defect and were acting fraudulently. This decision was then reversed on appeal. Okay, so maybe you haven’t had a murder at your doorstep, but maybe there’s something you’re worried will scare away a potential buyer. What are the rules around what to disclose when selling your home, and what are you obligated to reveal?
Let’s start with Patent Defects, A.K.A. Any Obvious Flaws. The two main kinds of latent defects can be considered either obvious flaws or silent deal killers. Obvious flaws would include things like: cracks on the exterior foundation wall that are easily seen, wood rotting on a back porch, or visible water damage. These kinds of things you could expect a buyer or a buyer agent to uncover with reasonable care and due diligence. You are NOT required to disclose these to a potential buyer. HOWEVER, you cannot take steps to conceal these defects without being exposed to a lawsuit.
Now comes Latent Defects A.K.A. The Silent Deal Killers. Examples include: a leaky basement that appears dry during showings, water damage in the ceiling from a roof leak that’s hidden by a coat of fresh paint, or a violent death in the home. These are things that negatively affect the property, but aren’t readily observable. You ARE required to disclose anything significant that is not readily apparent with due diligence or is not visually observable. If a buyer discovers something after the fact that wasn’t disclosed, then your sale might be in jeopardy and you could be sued for damages.
Bottom line, even if your sale eventually goes through and you wind up winning in court, think of the legal and financial stress of enduring this ordeal. When in doubt, consider being up front and avoiding a catastrophe, or getting legal advice. Want a little more info on what to expect from the selling process? Check this out.
