Higher Standards for Property Disclosure Statements

In BC, Sellers have a choice with Property Disclosure Statements (“PDS”), they could either:
a) simply cross them out and do not complete the questionaire and mark “as-is”; thus the principal of “buyer beware” would apply (Smith, 2005 BCSC 635); or
b) they would have to fill out the PDS “to the best of their knowledge” (Curtin v. Blewett, 28 RPR 3d 115).

Now, a recent Ontario Court of Appeal case, Krawchuk v. Scherbak 2011 ONCA 352, seems to impose a markedly higher standard on sellers who chose to fill out the PDS. The ONCA stated that Sellers, once they have chosen to complete a PDS have an obligation to “provide to the extent possible, accurate and complete information” and the Court went onto say that the Vendor was liable despite the fact that they “tried to be honest”.

Although not technically the “law” in British Columbia, this case will be compelling for BC Courts. Realtors should always advise Sellers that they have an obligation to “look further” if there are “issues” with a property of which they are aware. 

Of note also in this case, the Realtor, who has a dual agent, was liable to both the Buyer and Seller and had judgement against them for over $100,000 for failure to a) emphasize the importance of a home inspection to the Buyer and b) emphasize the importance of making full and complete disclosure to the Seller.

Addendum:
For those looking for the full text of the case it can be found here:
http://www.canlii.org/en/on/onca/doc/2011/2011onca352/2011onca352.html

The BC Real Estate Association in its July 2011 Issue of “Legally Speaking” discussed this case and came to the conclusion that “the outcome of the case would have been different had the case been decided in BC”. With respect this ignores the fact that the Court on Ontario has changed the law in Ontario and this case now gives more traction to a BC Court wishing to similarly change the law in BC.

But… stay tuned… this case has submitted for leave to appeal to the Supreme Court of Canada…