What Sellers Must Disclose About a Property in Alberta

You are getting ready to list your home and you are wondering what you have to tell buyers. Maybe there was a basement leak years ago, an unpermitted renovation, or something in the home's history that you would rather not raise. It is a fair worry, and the answer depends on what kind of fact is involved.

This article explains the main idea Alberta uses, the material latent defect, who carries the duty to disclose it, and which facts do not have to be volunteered. It is general information, not advice on your own house.

This article covers the law of Alberta.

The key idea: the material latent defect

Alberta's real estate rules use the term material latent defect. It 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.

In plain words, latent means hidden. A cracked window a buyer can see at a showing is not hidden. A problem behind a finished wall that you know about, and that a home inspector would not reasonably find, is the kind of thing this term is aimed at.

RECA, the Real Estate Council of Alberta, has said that sellers cannot hide defects or mislead buyers about the condition of the property, and that sellers must disclose the material latent defects they know about.

Who has to disclose: you and your realtor

The rules put a direct duty on licensees. A seller's licensee acting as sole agent must disclose to all buyers the material latent defects affecting the property that the licensee knows of. If a seller tells their realtor about a known defect, the realtor must then disclose it.

That means you cannot treat a conversation with your realtor as private on this point. Your realtor is also required to disclose to you, in a timely manner, the relevant facts affecting the transaction that the realtor knows of.

• Under a sole agency, the seller's licensee discloses known material latent defects to all buyers.
• Under transaction brokerage, the brokerage must disclose to the buyer the material latent defects it knows of, and disclose to the seller the material facts relevant to the buyer's ability to purchase.
• A buyer's licensee must disclose to the buyer the relevant facts the licensee knows of that affect a property or transaction.

Defects that are not physical

A defect is not always a crack or a stain. RECA's information bulletin gives an example of a non-physical defect: the seller lacks the appropriate building or other permits for the property. If you finished a basement or built a deck without permits, that is worth raising with your realtor and lawyer before you list.

What about past water damage, a former grow operation, or a death in the home? The rules in front of us define the duty by reference to material latent defects, meaning defects that are not discoverable on a reasonable inspection or that make the property dangerous or unfit for habitation. Whether a particular past event meets that test depends on the facts, including whether it left a lasting problem. Do not guess. Ask your realtor and a lawyer to look at your specific situation.

What can stay unmentioned

Disclosure duties attach to material latent defects and similar facts, not to every fact a seller knows. A clear example from RECA is that a seller has no obligation to tell potential buyers that the home is conditionally sold when accepting offers.

That is a narrow point, so do not stretch it. It does not mean you can stay quiet about a known defect. It also does not stop a buyer from asking you direct questions, and anything you say in answer should be true. Hiding a defect or misleading a buyer about the condition of the property is exactly what the RECA bulletin warns against.

What to do before you list

• Write down every problem you know about: leaks, structural movement, past repairs, and anything built or renovated.
• Gather permits and inspection records for any work done, or note where they are missing.
• Tell your realtor about known defects early, knowing they must disclose them.
• Ask your lawyer about anything that is a grey area, such as past events at the home.
• Answer buyers' questions truthfully and keep a copy of what you said.

If you are unsure whether something is a material latent defect, that uncertainty is itself a reason to get legal advice before listing, not after a buyer raises it.

Frequently asked questions