Houston, We Haven a Problem: The Need to Disclose Defects (Updated 2024)

Did you know that Sellers (and their real estate agents) must disclose any defects in a property that might affect a buyer’s use and enjoyment of that property? There are two kinds of defects:

1. Physical defects are the kinds of defects you can see. Generally, when you buy a house, you buy what you see – including the door with the missing doorknob and those scratched hardwood floors. Physical defects don’t have to be disclosed – a buyer can see them.
2. Latent defects are hidden and can’t be seen under normal inspections. The law says that if the Seller knows about a latent defect that makes the home either uninhabitable by the Buyer; unfit for the Buyer’s intended purpose; or dangerous, then the Seller must disclose this defect. In addition, the Seller cannot intentionally conceal what would otherwise be a patent defect.In Ontario, the Trust in Real Estate Services Act (TRESA) came into effect in December 2023 and places more onus on the Seller and their REALTOR to disclose what they know about a home listed for sale. Sellers must disclose every major hidden physical defect they know about – including what a home inspector might be unable to see. That might mean disclosing structural defects, mould, major leaks that haven’t been repaired, knob and tube electrical wiring, etc. If you or your agent know something about your home: it MUST be disclosed. 

   Agents representing buyers have duties of due diligence too, and are expected to find out everything that would matter to their client and protect them.

What kinds of things should a Seller disclose?

• The leak in the basement
• Your home inspector told you there were termites in the basement when you bought the house 5 years ago, and you didn’t treat them
• The knob and tube wiring in the house
• The great addition to the house was made without building permits
• The basement apartment is illegal
• The upstairs tenant hasn’t paid rent in 4 months
• There’s no heat in the 3rd floor loft bedroom
• There’s lead in your drinking water

Note: A murder or suicide that occurred inside a home does NOT have to be disclosed – but you can’t ask your REALTOR to lie if someone directly questions them. So, if a death has occurred in your home, be prepared to instruct your REALTOR about how to respond, keeping in mind that they cannot be instructed to lie.

Our Best Advice

• Be honest If you’re a seller, be honest with your REALTOR about your home – nobody wins if you don’t disclose what you need to disclose.
• Be cautious about getting a pre-listing home inspection – You’ll have to disclose anything it uncovers; you won’t be able to just file the inspection report away and pretend it never happened.
• Be specific – If you’re a Buyer, make sure your agent knows what’s important to you and is asking all the right questions. If it matters to you if someone died in the home, make sure your REALTOR kno
• If you’re not sure about whether or not you should disclose something, you should disclose it. If you were buying the property, would you want to know? Might it affect the Buyer’s enjoyment of the house and come back to haunt you later in a lawsuit?