What are seller’s obligations in real estate transaction?

People often ask me about sellers’ rights, but it’s important to remember that sellers have obligations, too. What I mean by this is that whenever someone has rights, they also have obligations.

Brokerages and agents have certain legal obligations that they owe to their clients and others they deal with in a trade. The legal obligations play a vital role in ensuring that real estate transactions are as seamless as possible, and designed to support buyers and sellers to make informed decisions.

The Real Estate Council of Ontario (RECO) administers a Code of Ethics. One obligation, for example, prohibits agents and brokerages from running false or misleading advertisements. As part of this, sellers’ agents are required to confirm all advertising details, including any representations their seller client may make about a home prior to listing or advertising it.

Agents are to verity claims or statements, but, if they cannot, they must not include it in the listing or advertisement. If it is based on someone else’s opinion or research, that reference should also appear in the listing or advertisement, so the reader understands the basis for the claim or statement.

Ontario law also requires sellers to disclose certain defects a property may have.

There are two types of defects: patent defects, which are problems with a home that are visible to the buyer or to a property or home inspector, and latent defects, which are problems that are hidden or not readily apparent.

As patent defects are typically visible, sellers are generally not required to disclose them to buyers. Examples of such defects are visible cracks in a foundation wall, missing safety railings, and stains on a ceiling.

Latent defects, by definition, are not obvious and may be challenging to spot, even by a home inspector. They could be things such as a major structural problem, or mould. Sellers are legally required to disclose defects that make the home dangerous or uninhabitable, but should seek legal advice about their specific circumstances.

If you are a buyer who thinks this sounds like a seller’s disclosure obligations are limited, you are correct. You may have heard of the term “buyer beware” or the Latin version “caveat emptor,” which means that the buyer is responsible for their own actions.

So, it is important for you to do your own due diligence to protect yourself.

While your agent does have to take all reasonable steps to investigate and disclose facts about a home that might affect your offer or decision to place an offer, I suggest you also think about leveraging the expertise of professionals. Even if a home appears to be in immaculate condition, consider getting an independent home inspection for increased peace of mind. If you have any questions, speak with your agent. Of course, it is always wise to consult with a real estate lawyer.

If you have a question for Joe about the home buying or selling process, please email [email protected].

Joe Richer is registrar of the Real Estate Council of Ontario (RECO). This column is for general information purposes only and is not meant as legal or professional advice on real estate transactions. Follow RECO on Twitter: @RECOhelps


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