Property Disclosure in Alberta: What Sellers Must Tell Buyers

Your realtor has handed you a form asking about the condition of your home: the roof, the basement, the wiring, past leaks. It is natural to wonder whether you have to complete it, what happens if an answer turns out to be wrong, and how much it matters once the sale closes.

This article explains the legal duties behind those questions in Alberta. Whether a particular form is used in your sale is something to confirm with your realtor or lawyer. What matters most is understanding what you are expected to be honest about and what can follow if you are not.

This article covers the law of Alberta.

What a disclosure form is really asking

A condition form is a set of written questions about what you know of the home. Your answers are statements of fact that a buyer may rely on when deciding to buy. Even if you are unsure how a form fits into your sale, the questions point to a legal idea that does apply: the duty to disclose serious hidden problems.

Ask your realtor or lawyer whether a form is being used in your transaction and how it will be given to buyers. Do not treat a blank or skipped answer as a safe choice, because the duties described below turn on what you actually know.

The duty to disclose hidden defects

Under the Real Estate Act Rules, a material latent defect is a defect that cannot be discerned through a reasonable inspection of the property. It also covers a defect that makes the property dangerous or potentially dangerous to occupants, or unfit for habitation.

RECA says sellers cannot hide defects or mislead buyers about the property's condition, and that sellers must disclose material latent defects they know about. A defect can be more than physical. For example, a seller may lack the appropriate building or other permits for the property.

The duty also runs through your realtor. A seller's licensee acting as sole agent must disclose to all buyers all material latent defects affecting the property that the licensee knows of, so telling your realtor about a known defect means the realtor must pass it on. Your realtor must in turn disclose to you, in a timely manner, all relevant facts affecting the transaction that the realtor knows of.

The duty is not unlimited. RECA states that a seller has no obligation to disclose to potential buyers that the home is conditionally sold when accepting offers. Disclosure duties attach to material latent defects and similar facts, not to every fact a seller knows.

The legal weight of your answers

The common-law starting point is caveat emptor, or let the buyer beware. Absent an express warranty, contractual condition, collateral contract, fraud, or error in substantialibus, the buyer takes the land with its defects after conveyance and cannot reopen the contract.

That starting point gives a seller limited comfort. The doctrine does not protect a seller who commits fraud or misrepresentation, gives an express warranty, or makes a collateral contract, and commentary notes that the doctrine has been eroding and its exceptions are growing. A written answer about the home's condition is the kind of statement that can be argued to fall into one of those exceptions.

• A known problem you leave out or play down can be treated as hiding a defect or misleading a buyer.
• A confident answer about something you do not know can create trouble that an honest "unknown" would not.
• A statement that the contract or a form treats as a promise may count as an express warranty.

Risks if an answer is wrong

A buyer who finds a hidden defect after closing may bring a claim. Under the Limitations Act, a claimant must seek a remedial order within 2 years of when they knew or ought to have known of the injury, that it was caused by the defendant's conduct, and that a proceeding is warranted. Claims are also barred 10 years after the claim arose, and whichever period ends first applies.

• A purchase contract cannot shorten the buyer's time to sue, because an agreement that reduces a limitation period is invalid. The parties may agree to extend it.
• The 10-year period is suspended while the defendant fraudulently conceals the injury, so a seller who concealed a defect cannot rely on that cut-off while the concealment continues.
• The limitation periods are also suspended while the claimant is a person under disability.

There is a counterpoint for buyers. Courts have said a buyer who keeps acting as owner for a long time after learning of a problem may be treated as having confirmed the sale, which can bar rescission even when fraud is alleged. What a court would decide in a given case depends on the facts.

What to do next

• Ask your realtor or lawyer whether a condition form is being used in your sale and what it will say to buyers.
• List every repair, leak, pest issue, renovation and permit you know about, and gather the paperwork.
• Tell your realtor about any known defect so it can be disclosed.
• Answer only from what you actually know, and say so where you are unsure.
• Check whether work done on the home had the appropriate permits.
• Keep a copy of every form and document you give to buyers.
• If you are unsure whether something is a material latent defect, get legal advice before you sign.

Frequently asked questions