There is a statement in OREA Form 299 “Seller Disclosure Latent Defect(s)” as follows:
“Members are encouraged to undertake numerous steps of discovery, disclosure and documentation of the same.”
Just what does that mean!
There’s no actual guidance provided.
The Listing agent is to protect the legal interests and potential liability of the Seller.
The job is not to get as much information as possible for the Buyer.
So, how do you protect the Seller?
First, you explain the law related to the obligation to disclose information. Now, the Seller knows what the law is and can offer assistance in terms of what they “know” and what they think might constitute a latent, material defect.
Second, you explain that latent means not easily found by a professional home inspector. If a professional can find it (without taking apart the walls etc.) then it’s patent. No, need to disclose.
Third, we have the material test. That basically means “important enough”. Here there are two tests:
- The defect would render the premises structurally unsound, or
- The defect would render the premises uninhabitable.
Those are tough steps. If either criteria happen to have been achieved, then it’s important enough to disclose.
Fourth, the Seller has to have knowledge. No knowledge, then, no obligation.
Consequently, pre-listing home inspections are risky. Up until now, the Seller had no knowledge. Now, the Seller engages a home inspector and they have to disclose. If they don’t then they face legal liability. So, just leave whatever inspection there might be to the Buyer.
Let’s look at that statement of guidance from OREA again:
“Members are encouraged to undertake numerous steps of
- discovery,
- disclosure and
- documentation of the same.”
Following that guideline can place the Seller at additional risk and could easily amount to negligence on the part of the agent.
Brian Madigan LL.B., Broker