What Must Be Disclosed When Selling a House in Ontario?

Your Disclosure Obligations When Selling a Home

Selling your house is an exciting step. You prepare your property, set a price, and anticipate a successful sale. A key part of this process involves disclosure. Sellers have important legal duties to inform buyers about certain property issues. Understanding what you must disclose when selling a house is crucial. It protects you from future legal problems and builds trust with potential buyers. This trust is the foundation of a smooth real estate transaction.

The law tries to balance the buyer’s need for information with the seller’s privacy. The principle of “caveat emptor,” or “buyer beware,” still has a place in real estate. This means buyers are responsible for doing their own research and inspections. However, this principle does not give sellers a free pass to hide serious problems. Sellers must reveal hidden defects that could not be discovered during a standard home inspection. Knowing these rules helps you prepare your home for sale honestly and effectively.

The Foundation of Seller Disclosure

The core concept of seller disclosure rests on the difference between two types of defects. A patent defect is a problem that is visible to the naked eye. Think of a cracked window, a stained carpet, or a hole in a wall. Buyers can easily see these issues during a viewing. Because these defects are obvious, the seller does not have a legal duty to point them out. The buyer is expected to notice them or find them during a home inspection.

A latent defect is the opposite. It is a hidden issue that a buyer could not reasonably discover during a normal inspection. These are serious problems that affect the home’s safety or use. For example, a cracked foundation hidden behind a finished basement wall is a latent defect. The seller has a legal obligation to disclose any known latent defects. This duty exists to ensure fairness in the transaction. Hiding a major problem can lead to expensive lawsuits long after you hand over the keys.

Click here for more information on realty companies near Caledon
Related Article: What is the Purpose of the Disclosure Statement?
Related Article: What is a Disclosure Document in Real Estate?

Disclosing Environmental Hazards

Beyond the structure of the house itself, sellers must disclose known environmental concerns. These issues can pose health risks or result in significant costs for the new owner. Your awareness of these hazards creates a responsibility to inform potential buyers. Transparency is essential for a legally sound sale. Many of these issues are not visible and require specific disclosure to be known.

You should share information about several specific environmental factors if they apply to your property. These include:

• Underground Oil Tanks

  Many older homes used oil for heating. If there is a buried oil tank on the property, you must disclose it. These tanks can leak over time, contaminating the soil and groundwater. Removal and cleanup can be very expensive.

• Asbestos Insulation

  Asbestos was a common building material for decades. If you know of its presence in insulation, tiles, or pipes, you should inform buyers. It poses a serious health risk if the fibres are disturbed and inhaled.

• Urea-Formaldehyde Foam Insulation (UFFI)

  UFFI was a type of insulation used in the 1970s. It was later banned due to health concerns related to formaldehyde gas emissions. While the gas dissipates over time, you must disclose the known presence of UFFI because of the stigma attached to it.

• Radon Gas

  Radon is a naturally occurring radioactive gas that can seep into homes from the ground. High levels of radon exposure are a health risk. If you have tested for radon and know the levels are high, this information should be shared with buyers.

Handling Property Stigmas

Some properties carry a “stigma,” which is a non-physical attribute that may impact its value or a buyer’s interest. These psychological factors stem from past events that occurred at the property. The legal requirements for disclosing stigmas can be less clear than for physical defects. However, transparency is always the best approach to avoid future complications or feelings of deception from the buyer.

A common example is a property where a major crime, such as a murder or suicide, took place. While there is no strict law compelling you to disclose this, hiding it could damage trust and potentially lead to a dispute. A more critical stigma to disclose is if the property was ever used as a marijuana grow operation. This must be disclosed because such use often causes serious physical damage, including mould, humidity issues, and unsafe electrical modifications. These are latent defects that directly affect the home’s safety and integrity.

Using the Seller Property Information Statement

The Seller Property Information Statement (SPIS) is a document that helps sellers provide information about their property. The Ontario Real Estate Association (OREA) created this form. Completing an SPIS is not mandatory by law. A seller can choose whether or not to fill one out. Your real estate agent may ask you to complete it as a way to provide comprehensive information to interested buyers. It can help streamline the disclosure process.

If you decide to complete the SPIS, you must do so honestly and accurately. The form asks specific questions about the property, including its history of leaks, structural issues, renovations, permits, and known defects. Answering “I don’t know” is acceptable if you truly do not have the information. However, providing false or misleading answers on the SPIS can make you legally liable. A buyer who relies on your incorrect information could sue you for misrepresentation. Always review the completed form with your real estate agent and lawyer.

The Risks of Failing to Disclose

Failing to disclose what must be disclosed when selling a house in Ontario carries significant risks. A buyer who discovers a hidden defect after the sale can take legal action against you. The legal process can be stressful, time-consuming, and very expensive. The consequences can be severe, depending on the nature of the undisclosed issue. Protecting yourself from this outcome is one of the most important parts of selling your home.

If a court finds you knowingly concealed a latent defect, it can order several remedies. The buyer may sue you for damages to cover the cost of repairs. For example, if you hid a foundation problem that costs $30,000 to fix, you could be ordered to pay that amount. In very serious cases of deception, a judge could order a rescission of the sale. This means the contract is cancelled. You would have to return the purchase price to the buyer, and they would return the house to you. Honesty is not just ethical; it is your best legal protection.

Final Thoughts on Seller Disclosure

Selling your home involves more than just marketing and negotiation. It requires a commitment to transparency. Your primary responsibility is to disclose all known latent defects—serious, hidden problems that a buyer cannot easily find. This includes structural issues, hidden water damage, and certain environmental hazards. Being upfront about these problems protects you from legal action and helps the buyer make an informed decision. The principle of buyer beware does not permit a seller to actively conceal major faults.

When considering what must be disclosed when selling a house in Ontario, always choose honesty. Use the Seller Property Information Statement carefully if you decide to complete one. Disclose property stigmas, especially those with physical consequences like a former grow-op. The short-term benefit of hiding a problem is never worth the long-term risk. Working with an experienced real estate agent provides valuable guidance, ensuring you meet all your disclosure obligations for a successful and trouble-free sale.