What Must a Seller Disclose About a House in Ontario?

If you are selling, you may wonder how much you have to tell buyers about your house, and whether something you leave out could lead to a lawsuit. The honest answer is that Ontario starts from a buyer-beware rule, with important exceptions that protect buyers from concealment.

This article explains the general picture, including what is and is not settled, so you can make careful choices before listing. It is not legal advice, and some questions depend heavily on the facts.

The starting point: buyer beware

Caveat emptor, meaning 'buyer beware', is the default rule. Where the contract leaves a risk with the buyer, a court will not shift it to the seller. In Lee v. 1435375 Ontario Ltd., a commercial sale with a zoning mistake, the buyer had implicitly assumed the zoning risk and failed to protect himself.

In plain terms, buyers are expected to look into the property themselves. Ontario's guidance advises buyers to get their own inspection even if the seller has one. A home inspection is not a pass or fail test, and the buyer may ask for repairs, accept the defect, ask for a lower price, or decide not to buy.

Condominiums have one difference worth knowing. Buyers of new or pre-construction condos have a 10-day right to cancel, but for resale condos no law sets a period for cancelling without penalty.

Where sellers get into trouble: concealment

The buyer-beware rule has an exception. Sellers can be liable for hiding defects. In Bowman v. Martineau, the trial judge found the sellers liable for non-disclosure and concealment of water damage. Liability was split 70% to the agents and 30% to the sellers, and that finding was not appealed.

In that case, the agent's negligence did not cause the defects. Damages against the negligent agent were therefore the difference between the price paid and the property's actual value, not the cost of repairs.

The case shows that hiding a defect can lead to liability for sellers. In Bowman, the problem was water damage that the sellers concealed rather than disclosed. Whether a particular act amounts to concealment depends on the facts.

Hidden defects, safety issues and stigma

People often ask about hidden defects and about a home's history, such as a troubled past. How far a seller must go in volunteering information about serious hidden defects or a property's history is a question where the answer depends on the circumstances.

Because of that uncertainty, the safest approach is usually to answer questions truthfully, avoid hiding anything you know about, and ask a lawyer about anything serious before you list. A lawyer can tell you how the law applies to your specific facts.

The seller property information statement

A seller property information statement is optional. If you prepare one for buyers, your agent must tell every interested buyer that it exists and must give a copy to any buyer who asks.

If you do prepare one, accuracy matters. A statement you know to be wrong, or that leaves out something you know, could hurt you later. If you are unsure of an answer, say so rather than guess.

• Only state what you actually know.
• Keep repair records, permits and invoices.
• Do not paint over, patch or hide a problem without disclosing it.
• Answer direct questions from buyers and agents honestly.

If you sell without an agent and the buyer has one, you are a self-represented party. The buyer's agent must act in the buyer's best interests and must pass on anything you tell them, including your price limits and motivations. Keep that in mind before you share details casually.

How long a buyer has to bring a claim

A buyer generally has two years from the day the claim was discovered to sue. A claim is discovered on the earlier of the day the buyer knew, or the day a reasonable person ought to have known, of the injury, its cause, who caused it, and that a lawsuit would be appropriate.

There is also an ultimate limit. No claim can be started after the 15th anniversary of the act or omission, whenever it was discovered. That 15-year period does not run while the defendant wilfully conceals the injury or its cause, while the claimant is incapable, or while the claimant is a minor without a litigation guardian.

A limitation period applies despite any agreement to vary or exclude it. Contracting out is allowed only within the exceptions in section 22, and the section 22(5) exceptions are limited to business agreements where no party is a consumer. Whether a deadline has passed in a particular situation is worth confirming with a lawyer.

What to do next

• Walk through the house and list every defect, leak, repair and past problem you know about.
• Gather receipts, permits and contractor records.
• Decide with your agent whether to prepare a property information statement.
• Talk to a real estate lawyer about anything serious, such as water damage, structural issues or unpermitted work.
• Make sure the agreement of purchase and sale reflects what has been disclosed.

Frequently asked questions