Property condition disclosure

If you’re a fan of “The Colbert Report” you may recall a recent instalment of “The Word,” a regular feature on the show where Steven, in talking about the James Frey’s book, A Million Little Pieces defined the Latin term caveat emptor as “Tough Titty.”

All kidding aside the literal translation of the term means “let the buyer beware” and in general, it’s the position that the Canadian courts typically take when dealing with actions which arise over property condition disputes between real estate buyers and sellers.

It’s important to note that the law sees certain types of defects in different ways. The first type of defect is one known as a “patent defect.” A patent defect is one which would be discovered through a reasonably prudent inspection of the property by the buyer, or anyone else who inspects it on behalf of the buyer. The law is very clear that a seller has no duty to disclose such defects. It is assumed that the buyer conducts a reasonable amount of due diligence on their own behalf and would therefore be aware of these defects. The second category of defects is one known as latent defects. A latent defect is one which may not be so obvious to a buyer who is conducting a reasonable prudent inspection of the property. Now, the courts generally sees latent defects in two separate categories, some of which require disclosure by the seller, some of which may not require disclosure. A buyer is always entitled to disclosure of “material latent defects.” Of course, this is where shades of gray come into play but generally the courts consider a defect to be a material latent defect if it meets one of the following criteria.

  • Renders the property dangerous or potentially dangerous to the occupants;
  • Renders the property unfit for habitation;
  • Renders the property unfit for the purpose for which the buyer is acquiring it where the buyer has made this purpose known to the seller or broker;
  • Concerns local authority and similar notices received by the seller that affect the property; or
  • Concerns the lack of appropriate municipal building and other permits.

Finally, the law does not expect a seller to disclose problems which he or she is unaware of and the burden of proof is upon the buyer to prove that the seller had knowledge, or ought to have had knowledge of existing material latent defects.

The most prudent course of action for any buyer is to make inquiries of the seller on issues of property condition. A seller has a legal duty to not misrepresent and can be held liable for blatant attempts to mislead a buyer. Secondly; a professional inspection of the property by a qualified inspector is a must.

Sellers who have property condition issues with a property they wish to sell should be forthright with their real estate broker and their lawyer seeking advise on their duty to disclose. My experience suggests that most condition issues can be dealt with in a reasonable manner if they are brought forward in a timely fashion, before the seller has accepted the buyers offer. If a buyer discovers material defects after possession they are far less amiable at working towards a solution. No wonder.

Norm Fisher
Royal LePage Vidorra

Saskatoon real estate market continues at record pace

The Saskatoon Real Estate market continued to move at a “faster than normal rate” with buyer demand outweighing supply of good quality residential listings. The month of October saw resale activity reach 303 units, an increase of 26% as compared to October of 2005. Dollar volume soared close to 50% as compared to the same period in 2005 to close the month at $64,875,357.00. Average selling prices continued to rise. Saskatoon homes brought an average price of $166,766 in October, which represents an increase of 19% over October sales in 2005. A larger than normal number of sales in the luxury category skewed those numbers to some extent. Overall, average selling prices are up 11% taking sales activity in all categories and throughout the year into account.

The current state of active listings, combined with steady demand leads me to believe that we will continue to see upward pressure on home prices into the early winter months.

Norm Fisher
Royal LePage Vidorra