How Do Property Disclosure Statements Work in Alberta?

A property disclosure statement is an outline of known issues with the property, ensuring transparency and protecting both parties in a real estate transaction. While Alberta law does not require a formal seller disclosure form, sellers must still disclose known defects that could make the home unsafe or unlivable. Failing to disclose key issues—such as foundation cracks, water damage, or mould—can lead to legal trouble after the sale. Let’s break down what Alberta sellers need to know about property disclosures and how they can help you sell your home.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

What Is a Property Disclosure Statement?

A property disclosure statement is a crucial document in the real estate process. It provides detailed information about the condition of a property, including any known defects or issues that may affect its value or safety. Typically completed by the seller, this document is given to potential buyers before they make an offer on the property.

The primary purpose of a property disclosure statement is to ensure that potential buyers have a clear understanding of the property’s condition, enabling them to make an informed decision about whether to proceed with the purchase. By being transparent about the property’s state, sellers can avoid mistakes, foster trust, and facilitate smoother transactions.

Is a Property Disclosure Statement Required in Alberta?

In Alberta, property disclosure statements are not legally mandated; however, sellers are obligated to disclose certain types of defects to potential buyers. Specifically, sellers must inform buyers of any known material latent defects. These are hidden issues that are not discoverable through a reasonable inspection and may render the property dangerous, unfit for habitation, or significantly impact its value. Examples include:

• An illegal basement apartment
• A history of structural, flooding or fire damage
• Foundation cracks and problems
• Roof water problems

While the use of a property disclosure statement is voluntary, providing one can demonstrate transparency and help protect the seller from future legal disputes. This document allows sellers to formally document disclosure of known information about the property's condition, which can take away some of the stress of selling a home.

Do Patent Defects Need to Be Disclosed by a Sellers?

A seller is not responsible for disclosing patent defects. Patent defects are visible issues that a buyer could reasonably discover during a property inspection. Additionally, Alberta law does not obligate sellers to disclose so-called "stigmatized" property information, such as past crimes or deaths that occurred on the property, unless directly asked by the buyer.

What Sellers Must Disclose

Sellers are obligated to disclose any known defects or issues with the property, which include:

• Any known structural damage or defects
• Any known issues with the plumbing, electrical, or HVAC systems
• Any known issues with the roof or foundation
• Any known environmental hazards, such as lead-based paint or asbestos
• Any known issues with pests or rodents
• Any known issues with the property’s boundaries or easements

Additionally, sellers must disclose any known facts about the property that could negatively affect its value or safety. This might include information about the neighbourhood, such as nearby industrial or commercial activities, or details about the property’s history, such as past damage or repairs. Being thorough and transparent in these disclosures helps prevent future legal and financial complications.

What Happens If a Seller Fails to Disclose a Known Defect

While sellers are not obligated to disclose patent defects, failing to disclose material latent defects could lead to legal consequences. Although property disclosure statements are voluntary, they can help demonstrate transparency and reduce the risk of future disputes.

If a seller knowingly conceals or fails to disclose a material latent defect, the buyer may pursue legal action for misrepresentation, fraud, or negligent misrepresentation. Potential remedies include rescinding the contract or suing for damages to cover repair costs or loss in property value. If the seller intentionally misled the buyer, courts may award punitive damages. However, if a defect was visible or could have been identified in a reasonable inspection, the seller is typically not liable. Buyers concerned about undisclosed defects should seek legal advice to determine their options.

The Role of the Real Estate Agent

Real estate agents play a crucial role in helping sellers navigate their disclosure obligations, ensuring compliance with Alberta’s real estate laws while minimizing legal risks. A good agent can be especially useful to first-time home sellers, educating them on the difference between material latent defects and patent defects. Agents also provide guidance on completing a property disclosure statement (if the seller chooses to use one), helping them document known issues transparently to avoid future disputes.

Beyond advising sellers, agents act as intermediaries to facilitate clear communication between both parties. They help sellers respond to buyer inquiries about the property’s condition, ensuring that responses are accurate and in line with disclosure laws. If a seller is uncertain about whether to disclose a particular issue, an agent may recommend consulting a real estate lawyer to avoid potential legal consequences. Agents help protect sellers from lawsuits while fostering trust in the transaction, a benefit you'd lose out on by selling a home by yourself.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

Property Disclosure: Know Your Rights & Responsibilities

Understanding and complying with property disclosure requirements is essential for people selling homes in Calgary to avoid legal disputes and ensure a smooth transaction. While disclosure statements are not legally required, sellers must still inform buyers of any material latent defects that could impact the property's safety or livability. Working with a knowledgeable real estate agent can help sellers navigate these obligations, promote transparency, and build trust with potential buyers. Ultimately, honesty is the best approach—not only to protect sellers from legal consequences but also to foster a fair and ethical real estate market.