Under Ontario law, home sellers are required to acknowledge certain defects or conditions of their property that may influence its valuation or appeal. Non-disclosure of relevant information can result in disagreements, financial penalties, voided transactions, or, in severe circumstances, legal consequences. In this article, we will analyze what you are required to disclose when selling a house in Ontario.

Note: This article intends to offer high-level, introductory insights on a complex topic. For detailed information tailored to your personal situation, consult an experienced real estate lawyer.

Patent Defect vs Latent Defect

When it comes to what you have to disclose when selling a house in Ontario, two terms are notably paramount – patent defect and latent defect. Understanding these two designations and how they differ ensures sellers are well-positioned to protect themselves and limit liability when selling.

What is a Patent Defect?

A patent defect is an issue with the home that is explicitly visible. This could be a defect as small as a cracked window, or as significant as an ostensibly damaged roof.

In Ontario, sellers are not required to preemptively disclose or acknowledge patent defects, as it is assumed that a buyer will have noticed and understood any visible issues before placing their purchase offer. However, sellers may not mislead buyers by attempting to disguise, obfuscate, or downplay a patent defect. Sellers must also answer with transparency should the buyer directly inquire about a particular issue or aspect of the property.

What is a Latent Defect?

Inversely, latent defects are property issues, known or unknown, that are not immediately visible to the untrained eye. Latent defects, from a legal standpoint, present a more intricate scenario than patent defects.

Sellers are obligated to disclose latent defects of which they have knowledge, particularly if these defects render the property dangerous. However, as latent defects are, by nature, difficult to identify, sellers may not always know about them. This creates risk for both purchasers and sellers, which can be mitigated with various strategies, such as the completion of a thorough home inspection before the closure of the transaction.

Should the seller have reasonably possessed knowledge of a significant defect, their failure to disclose it may still be construed as negligent misrepresentation. Courts may evaluate whether a reasonable homeowner in comparable circumstances would have been cognizant of the issue.

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Seller Property Information Statement

Although not legally mandated, sellers may be advised by their real estate agent to complete a Seller Property Information Statement (SPIS), sometimes referred to as property disclosure statement. Standardized by the Ontario Real Estate Association, a SPIS document creates a formal space for sellers to disclose patent and latent defects.

Common issues outlined on a SPIS may include, but are not limited to:

• Problems with a home’s foundation, structure, or roof.
• Previous renovations or modifications to the home.
• Weather-related damages, such as wind or water.
• Climate and environmental hazards.
• Issues with internal systems (heating, electric, plumbing, etc.)

Is the Seller Responsible for Any Repairs After Closing?

While sellers are advised and often required to disclose both patent and latent defects, resolving issues is a separate conversation entirely.

A buyer may leverage required repairs, renovations, or modifications to the property to negotiate a more favourable asking price; however, they are generally responsible for initiating any work they have done on the home after moving in.

Occasionally, defects may occur between the time of closing and possession. In these instances, the seller is generally responsible for coordinating the repair of, paying for, and closing any new issues as they arise.

Consequences of Inadequate Disclosure

Failing to properly disclose patent or latent defects can entail substantive consequences for sellers. The severity of these repercussions is dependent on specific circumstances; however, potential outcomes may include financial compensation for the buyer – covering repair costs and legal expenditures, the delay or outright rescission of the sale, or in rare cases, legal penalties. Hence the importance of ensuring you are accurate in what you disclose when selling a house in Ontario.

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How Long Are You Liable After Selling a House in Canada?

Should the buyer discover issues with the property after taking possession, there are limitations to the previous owner’s liability. In the case of alleged undisclosed latent defects, a buyer may have up to two years to pursue damages; however, they must also prove that the seller was intentionally untruthful in their original disclosure.

Selling Your Home With Armin Group

Combining thoughtful, personalized service and methodical, ROI-amplifying selling strategies, Armin Group provides sellers with an unparalleled market experience. Whatever the circumstances may be, our deliberate and carefully evaluated range of listing strategies allows sellers to feel assured and confident as they navigate the market.

Selling your Toronto home? Armin Group can help. Send us an email at ar********@************ty.ca or call 416.960.9995 to begin your journey.