What you need to disclose when selling your house

Selling your home in Canada involves much more than just finding a buyer. There are many points to consider when going through the process, and one important factor is being transparent with your real estate agent about the condition of your property. 

Sellers are legally obligated to disclose material latent defects—hidden issues that a buyer would not reasonably discover on their own and that could make the home unsafe, uninhabitable, or extremely costly to repair. Material latent defects can include serious structural issues, significant water intrusion that isn’t visible, or known environmental hazards such as mould or asbestos. 

While the rules vary from province to province, one thing remains the same: failing to disclose known issues can lead to serious legal and financial consequences.  

What is a disclosure? 

A disclosure is information a seller provides to a buyer about the property’s condition that affects safety, livability, or property value. 

In Canada, sellers are not required to disclose every issue, but they are required to disclose material latent defects to potential buyers. These are important details that could potentially impact the buyer's decision-making process and affect the value or desirability of the property. (e.g., past renovations, zoning issues, or recurring maintenance problems). 

Anne Alkok, Broker of Record with Wahi, notes that the definition of “material latent defect” varies slightly across jurisdictions, and some provincial purchase contracts include additional language that clarifies what must be revealed. 

“Ultimately, if there is any question about whether something needs to be disclosed, the seller should consult with a lawyer,” she advises. 

In real estate, disclosure is meant to ensure transparency and fairness in a transaction. There are two categories of defects: 

Patent defects: issues that are easily observable during a home inspection. Some examples include: 

• Cracks in the foundation
• Damage on the roof
• Water damage 

Latent defects: hidden issues that are not easily seen or found during an inspection. Examples of hidden issues: 

• Crack in the foundation that’s been covered by a recent renovation
• Roof damage covered by snow
• Water damage covered by a recent paint job 

By disclosing this information, sellers protect themselves from legal disputes and help buyers make informed and confident decisions about their purchase. 

“Documenting disclosures in the purchase agreement ensures all parties understand what was revealed and reduces the likelihood of disputes later on,” explains Alkok. 

Common property disclosures  

From hidden defects to past repairs, sellers have a legal obligation to share certain information with potential buyers. Here is a list of the key ones to cover: 

Structural and mechanical:  

• Foundation or structural issues
• Roof problems
• Problems with the plumbing or HVAC system
• Past water damage, flooding, leaks or drainage issues 

Environmental hazards:  

• Asbestos or lead paint
• Mould or past mould issues
• Exposure to radon gas
• Underground oil tanks or other soil contamination   

Repairs and renovations:  

• Past renovations that may have altered the original structure
• Significant repairs
• Answer any questions truthfully about past work done 

Legal and zoning:  

• Any violations of zoning laws
• Property line disputes, or easements
• Any nearby construction or development that could affect the property (must be truthfully answered if inquired about)
• History of deaths or violent crimes on the property that could affect the value 

Alkok says an often-asked question is whether sellers must disclose events such as a violent crime or a death in the home. 

“While these are typically considered stigmas rather than defects, buyers often learn about them through neighbours, and some buyers consider them highly relevant. The legal obligation to disclose such information varies, but when in doubt, a seller should seek legal advice on how to proceed.”  

Other relevant information:  

• Pest infestations
• Natural hazards such as being in a flood zone or earthquake fault line   

Important tip: When in doubt, disclose! It’s safer to be upfront about an issue than to risk a future lawsuit for non-disclosure. Even if you’re selling a property “as is,” you’re still legally obligated to reveal any known problems or defects. To protect yourself, keep detailed records of all disclosures, repair receipts, permits, and related documents. 

Consequences of non-disclosure 

People may wonder what the repercussions of not disclosing these sorts of details are when selling their home.  

Alkok warns how failing to disclose a material latent defect can lead to costly and time-consuming litigation.  

“Buyers may sue the seller — and in some cases the listing agent — if they discover a defect that was known but not disclosed. Courts can award substantial damages, including the cost of repairs, loss of value, and legal fees. The legal and financial fallout can far exceed what might have been avoided through proper disclosure.” 

There are often overlooked disclosures that she has witnessed and warns against. For example, if something has been repaired, the seller may feel it is no longer necessary to disclose it. Here are a few examples to keep in mind: 

•  Intermittent or seasonal issues, such as recurring basement flooding 
• Renovations done without permits 
• Past insurance claims that might affect insurability  

“Sellers sometimes assume that if a problem has been “fixed,” it no longer needs to be disclosed — however, the history of the issue can still be material to a buyer. Repairs often come with warranties, some of which may be transferrable to the new buyer,” says Alkok 

The insurance aspect of property disclosure 

Disclosure plays a key role in protecting both sellers and buyers during a home sale, especially when it comes to insurance coverage and liability.   

Matt Dillon, EVP of National Operations at Surex, says disclosure is the foundation of your policy.  

“When you buy a home, you need to secure home insurance immediately upon possession. Undisclosed problems can cause the insurer to refuse issuance of a policy or create lengthy delays securing a policy until these issueds are remedied.” 

Protects sellers from liability 

If you fail to disclose a major issue (like foundation damage or previous flooding) and the buyer later discovers it, you could face legal action.  

“If you knowingly hide a major defect that the buyer discovers later (like a foundation crack covered by drywall) you could be sued for non-disclosure,” warns Dillon. 

• The buyer may file a claim against you for misrepresentation or non-disclosure
• Your home insurance liability coverage (if still active during the sale process) typically won’t cover intentional non-disclosure
• You could be held personally responsible for the cost of repairs or legal settlements. 

Your home insurance typically won’t cover intentional non-disclosure, leaving you personally responsible for repair costs or legal settlements. 

“If you hide a major issue, the insurance company could argue that they never would have insured the home or charged a higher price. If it is discovered the hidden issue was a contributing factor to a claim, they can deny the claim and potentially cancel the policy,” explains Dillon. 

Helps buyers get insurance coverage 

Dillon says when people are selling their home, “Everyone wants to focus on the positives, but ignoring past or current problems can seriously hurt the buyer's ability to secure home insurance.” 

Insurers rely on accurate information about a home’s condition. If defects such as old wiring, or prior water damage aren’t disclosed, it could lead to: 

• Denied or delayed insurance approval for the buyer
• Higher premiums
• Required repairs before a policy is issued 

He says when sellers often overlook disclosing things like past water damage, prior insurance claims, unpermitted work, or old systems, “These are all issues that could have impact on the buyer's ability to secure a home policy.” 

Without disclosure, the buyer might not be able to secure home insurance, which could delay or cancel the sale entirely. 

Avoid claim denials 

Insurance companies may deny claims if they find that damage stems from a pre-existing or undisclosed issue. For example, if a past water leak wasn’t disclosed and the buyer later files a water damage claim, the insurer may determine that the issue was pre-existing and deny coverage.  

With any type of insurance (home, car, business) Dillon says “You are obligated to tell the truth. Insurance works on trust,” and goes on to explain, “If you fail to disclose a key fact that would have changed the insurers decision, they are entitled to either refuse the claim when a loss happens or cancel the policy.” 

In short, if key information about the property is withheld, both sellers and buyers' risk having their insurance claims denied. 

“For peace of mind and true financial protection, the answer is simple: Tell the whole truth about your policy always to the best of your knowledge and ability,” he advises. 

Vacant homes during sale 

If a property sits vacant for more than 30 days during the selling process, the seller’s home insurance may no longer apply. Sellers should speak with their advisor about adding a vacant home endorsement or temporary coverage to stay protected. 

Ultimately, full disclosure isn’t just a legal requirement; it’s essential for transparency and insurance integrity. It protects both parties from costly legal or coverage issues, ensures that coverage remains valid throughout and after the sale, prevents future liability for sellers, and gives buyers peace of mind knowing they’re fully protected. 

Disclosure requirements by province 

In Canada, disclosure requirements for home sellers vary by province, with some enforcing mandatory forms and others encouraging voluntary transparency.  

In British Columbia, completing a Property Disclosure Statement (PDS) is mandatory, requiring sellers to provide detailed information about the property’s condition and any known defects. This helps protect both buyers and sellers by ensuring full transparency. 

Other provinces, such as Ontario, Alberta, Manitoba, and Nova Scotia, treat disclosure statements as voluntary but are strongly recommended. Ontario’s Seller Property Information Statement (SPIS) and Manitoba’s Property Disclosure Statement are commonly used to reduce disputes and promote honest communication.  

In Alberta, while no specific form is required, sellers are legally obligated to disclose all known material latent defects that could affect the property’s safety or value. Nova Scotia’s real estate commission also encourages the use of disclosure forms, recently expanding them to include climate-related risks, especially for coastal properties. 

Provinces including Quebec, Saskatchewan, New Brunswick, Newfoundland, and Prince Edward Island, similarly recommend disclosure forms to promote fairness in real estate transactions, but are not mandatory. 

In the Yukon, Northwest Territories, and Nunavut, there are no standardized disclosure forms, but sellers are still required to reveal any known defects under general contract law and the duty of honesty. 

Buyer Beware 

Alkok says the default principal in real estate law in Canada is “buyer beware” but warns that “the principle does not protect a seller who withholds information about known latent defects.”  

And this may hold true as she has encountered situations where sellers attempted to conceal significant problems. Some examples include: 

• Large furniture or storage units strategically placed to hide foundation cracks 
• Fresh paint used to cover water damage or mould
• Renovations that concealed structural problems without proper permits  

“In these situations, undisclosed latent defects led to disputes, some of them involving lengthy and expensive lawsuits. It is often less expensive to disclose than to deal with the fallout of a buyer discovering the issue later,” she warns. 

Alkok advises that the best practice is to disclose in writing (and before an offer is presented) for a smooth sale process.  

“Written disclosure avoids ambiguity and provides a clear record of what was communicated. If the buyer proceeds with an offer, the information can also be incorporated into the purchase contract,” she says.