Must a BC Realtor Disclose Material Latent Defects to Buyers?

A latent defect is a flaw you cannot see on an ordinary viewing: a slow leak behind a wall, a drainage problem, or a past repair that was never done properly. If you are buying, you want to know whether your realtor had to tell you. If you are selling, you want to understand what your realtor's role is and where it ends.

Several people can owe different duties in one sale, and the duties are not the same. This article explains the realtor's side under British Columbia's licensing rules, how that differs from the seller's own position, and what you can do if you think something was hidden.

This article covers the law of British Columbia.

Who regulates realtors in British Columbia

Real estate licensees in British Columbia are regulated by BCFSA (the BC Financial Services Authority) under the Real Estate Services Act. Since August 1, 2021, BCFSA has been the sole regulator, after the Office of the Superintendent of Real Estate and the Real Estate Council of B.C. integrated with it. Older material that refers to the Real Estate Council may be out of date.

The rules do not sort people into "buyer" and "customer." They distinguish a client, who is the principal who engaged the licensee, from an unrepresented party, who is a party to the trade and is not a client of a licensee for that trade. Which one you are shapes what the realtor owes you.

What a realtor owes their own client

A licensee's duties to a client include acting in the client's best interests, keeping client information confidential, disclosing all known material information about the services, and communicating all offers in a timely, objective and unbiased manner. Whether that disclosure duty reaches a particular hidden problem, whether the problem counts as material, and whether the realtor actually knew of it all depend on the facts, so it is worth confirming with a lawyer.

These duties can be modified only by a written agreement, and even then the brokerage must still supervise its licensees and protect confidential information. If your agreement changes the usual duties, read that wording closely.

What a realtor owes the other side

A realtor owes some duties to everyone, not only clients. A licensee must act honestly and with reasonable care and skill, including toward parties who are not clients. Before providing trading services, the licensee must disclose whether or not they will represent a party as a client.

If the licensee does represent a client, they must also tell an unrepresented party the risks of receiving assistance from the licensee and recommend that the party seek independent professional advice. For an unrepresented buyer, that means the realtor across the table is not working for you, and you should arrange your own inspection and advice.

The seller's own duty is a separate question

The realtor duties described above are duties of licensees under the licensing rules. They describe what licensees owe, and they do not settle every question about a sale. How a seller's own responsibilities about hidden defects apply depends on the wording of the documents, what the seller knew, and what was said, so it is worth confirming with a lawyer.

Who is responsible for what in your sale depends on your situation. If you are selling and you know of a problem, talk to your realtor and a lawyer about how it should be handled before listing.

When silence can become a regulatory problem

Staying quiet is not always wrongdoing, but there are points where it can become serious. Professional misconduct includes contravening the Act, wrongful taking or deceptive dealing, and incompetence. Conduct unbecoming is conduct the superintendent judges contrary to the public interest or bringing the industry into disrepute. Whether a failure to mention something fits any of these depends on what the licensee knew and what they said or left out.

Any person may complain to the superintendent if they believe a licensee may have committed professional misconduct or conduct unbecoming. The complaint must be in writing and include particulars. Unless it is anonymous, the superintendent must acknowledge it and tell you the outcome.

Be realistic about what a complaint can do. The discipline process provides no damages for the complainant, because the Act's remedies are regulatory orders. Compensation is available only through the Special Compensation Fund, and only for compensable loss, meaning money held by a licensee that was misappropriated, wrongfully converted or fraudulently obtained. A hidden defect on its own will not usually fit that description. Recovering the cost of a defect is a separate legal question to raise with a lawyer.

What to do next

• Work out whether you are a client or an unrepresented party, and read your service agreement for any change to the usual duties.
• Ask your realtor in writing what they know about the property's condition and any past repairs.
• Arrange your own inspection and independent professional advice, especially if you are unrepresented.
• Keep emails, listing material, disclosure statements and the contract of purchase and sale.
• If you suspect something was concealed, speak to a lawyer promptly about your options, since deadlines may apply.
• Consider a written complaint to the superintendent if you think a licensee acted improperly.

Frequently asked questions