A mandatory document enters the picture when buying or selling property: a seller’s declaration. Depending on where you’re located, you may have heard it called a declarations by the seller form or a property disclosure statement. The purpose of this form, mandated by the Organisme d’autoréglementation du courtage immobilier du Québec (OACIQ), is to inform buyers of a property’s features while ensuring the transparency essential to any transaction. In fact, it’s so important it’s included as an appendix to all brokerage contracts.
What is a seller’s declaration?
A seller’s declaration is often referred to as a property’s curriculum vitae. It contains various information about a building’s history, previous repairs or renovations, as well as any past or current issues.
This document gives potential buyers a complete description of the condition of a property before making a promise to purchase. As noted on the OACIQ website, a declaration is essential to protect both sellers and potential buyers by preventing future lawsuits.
So it’s imperative to ensure this declaration is properly filled out in compliance with OACIQ requirements to avoid ambiguity and facilitate the negotiation process.
A real estate broker plays a crucial role by supervising the process. They are responsible for completing each section of a seller’s declaration, jointly with the seller, and fulfilling their verification obligations as needed to confirm that information is accurate. This ensures that each step is carried out in full compliance, in the interests of all parties involved.
Did you know that Confia real estate agency connects you with recommended brokers to help you navigate the complexities of the market? Filled with knowledge about best practices, these true professionals will guide you through each step of your buying or selling project, from reviewing the seller’s declaration to finalizing the transaction.
4 things to keep in mind when filling out a seller’s declaration
A seller’s declaration contains all the relevant information about a dwelling’s condition and history. Here are four of them.
1. Managing a condo sale
A buyer needs to determine whether it’s a divided or undivided co-ownership. In the case of a divided property, each owner has a separate apartment or dwelling (often called a ‘unit’), as well as a share of common areas. With an undivided property, the property is shared as a whole without clear delimitation (but with exclusive rights of use).
This distinction has important implications, particularly with respect to property rights and management of common areas.
In the case of divided co-ownership, a seller's declaration form specifically earmarked for this type of property must be completed. It includes an entire section on condo management - contingency funds, vertical and horizontal condo groups, amount of common expenses, etc.
2. Renovations carried out
A detailed history of all renovations and work carried out on a property is an integral part of a seller’s declaration. Significant upgrades should be listed, like redoing a roof, adding an addition or updating the electrical system.
This allows a buyer to assess a property’s general condition and anticipate work that’ll need to be done in the future. It helps a seller prove the added value gained by certain renos they’ve done. According to the OACIQ, it’s also recommended to attach work-related receipts and supporting documents ensuring crystal clear transparency.
3. General information about a property
A seller’s declaration also contains general information about a property. Expect to see the year of construction, total lot size, type of heating and air conditioning, as well as materials used. This data helps anyone wanting to buy to better understand the value of a property and its potential maintenance costs.
It goes even further by revealing the condition of a property and whether crucial elements are up to code. An older building may require a more in-depth inspection or extra renovations that go beyond cosmetic.
4. Issues to declare
This section is one of the most demanding. It has to include any potential or current issue or defect that could affect a property, whether that be cracks in the foundation, water infiltration or on-its-last-legs insulation. These details have to make their way into the document, because intentionally leaving them out could have serious legal consequences. The OACIQ strongly recommends that owners come clean on any issue, big or small, to prevent a legal headache down the road if ever a hidden defect comes to light after a sale.
When to provide a seller’s declaration?
A seller’s declaration has to be provided before a buyer concludes a promise to purchase, to which it’ll be attached as an appendix, because it’s an integral part of the due diligence process. It allows a potential buyer, who also has to confirm receipt, to ensure that everything is in order before signing a promise to purchase.
What are some common errors to avoid?
For sellers
A common mistake among sellers is to underestimate or overlook an issue, brushing it off or rationalizing that it’s trivial and not worth mentioning. However, even the smallest defect should be declared to avoid being accused of misrepresentation. An omission could lead to legal action post-sale.
For buyers
Not thoroughly reading a seller’s declaration or not asking enough or the right questions are at a buyer’s own risk. A declaration is a mandatory document that shares key takeaways that can influence whether a sale moves forward and it’s important to properly understand it.
Real estate brokers recommended by Confia can guide clients and help them decode the information it contains and make sure everything is understood before signing a promise to purchase.
Importance of an inspection
A seller’s declaration is not intended to replace a prepurchase inspection. Although this form contains a lot of pertinent information, it isn’t an exhaustive list. There may be a hidden defect the seller doesn’t know about and therefore doesn’t declare.
However, a professional inspection can reveal structural issues or other hidden defects that aren’t mentioned in a seller’s declaration. The form and inspection should therefore be considered as two complementary tools, essential for protecting both parties. It’s recommended to get an inspection done by a qualified professional who is capable of conducting a thorough examination of the property.
The Association des inspecteurs en bâtiment du Québec (AIBQ) is an invaluable resource to get this done. It’s made up of certified members who adhere to the highest standards of professional practice. This ensures that future homeowners benefit from recognized expertise, which can increase their confidence in the home-buying process.
Seller’s declaration and hidden defects: myth vs. reality
One of the most common myths out there is a seller’s declaration provides automatic protection against hidden defects. That’s not entirely true. Although it does identify some potential issues, it does not cover all the defects that future owners may find after a sale – including hidden defects.
Contrary to popular belief, a seller is often unaware of a hidden defect and therefore cannot report it! So it’s always recommended to proceed with a prepurchase inspection to make as in-depth a search as possible to uncover hidden defects that could affect the quality of an interested property.
Legal warranty and seller’s declaration
Let’s clarify a point right now to avoid any confusion: a seller is required to provide a seller’s declaration, completed to the best of their knowledge, whether the sale is made with or without legal warranty. The difference between these two sales terms lies in the legal recourse available to a buyer in case of defects.
If it’s a sale with legal warranty, a seller guarantees that a property is free from defects of title (encroachments, mortgages other than those assumed by a buyer, public law limitations, etc.) and defects of quality, except those explicitly listed in their seller’s declaration. Finding such a defect after buying a home may therefore be a basis for possible recourse.
On the other hand, if it’s a sale without legal warranty, the buyer is taking more of a risk as the other party has significantly lowered their legal responsibilities. This option is often used for properties needing extensive renovations or during an estate sale. In this context, a seller’s declaration and prepurchase inspection become even more important.
Contact Confia real estate agency
Whether you are looking to buy or sell, using a broker recommended by Confia allows you to navigate the process as smoothly as possible. The team provides you with a transparent framework conducive to a seamless experience.
How does it work? First, get in touch with the Confia real estate agency to discuss your buying or selling project. An advisor will assess your specific needs and provide you with a choice of brokers adapted to your situation. This personalized pairing service allows you to select the specialist best suited to you and then benefit from their guidance that will greatly simplify your real estate transaction.
Contact Confia’s advisory serviceFAQ
Why is it important to review a seller’s declaration before submitting a promise to purchase?
This step makes a buyer aware about the condition of a property in order to make an informed decision.
Is a seller’s declaration mandatory?
In Quebec, a seller’s declaration is mandatory for the sale of any residential property containing less than five dwellings. If the seller is a legal person, completing the form is not mandatory but strongly recommended by the OACIQ.
What are the consequences of misrepresentation?
A false declaration can result in legal action. A former owner who omits important details about the condition of their property may be held liable after a sale, whether it’s intentional or not.
So it’s a must to accurately complete a seller’s declaration and include all relevant details. As stressed by the OACIQ, transparency keeps conflict at bay and protects buyers and sellers.
Interested in undertaking a buying or selling project? Contact the team at the Confia real estate agency, word of mouth says they’re committed to offering quality service. Benefit from sound advice crafted with you in mind. Together, close your deal with confidence!
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