Real Estate Agent in East York - Better Homes And Gardens Real Estate

Does Your Home Have Defects? Disclose! Disclose! Disclose!

25 January 2017
Kevin Hartley

I recently wrote a post about the problem of not disclosing the existence of Kitec, the often orange or blue flexible aluminium and polyethylene piping that was recalled about 2005 due to a tendency to corrode at an accelerated rate, despite being marketed as an alternative to copper piping that was corrosion-resistant. 

As I do, I shared this post on social media and in response to a comment essentially suggesting that nobody would/should ever disclose such a defect unless it was forced upon them to do so, I felt compelled to write this post explaining why I say force disclosure upon yourself.

The fact is every home has some degree of defect(s). Frankly, I'd be stressed about a home that was defect free; I'd worry that something was lurking somewhere and my experience suggests that there usually is something...lurking...somewhere...just waiting to open up your pocketbook.

Relative to the Kitec...

Simple scenario. Your house is for sale. An interested buyer comes and asks you if the house has kitec. You decide to lie and not disclose the existence of kitec, and tell them the home does not have Kitec. The buyer has tried to perform due diligence by asking you about the existence of Kitec, and you've informed them that there is none, despite knowing that there is. 

They buy your house. 

A couple of months after moving in, the Kitec bursts while the dishwasher is running, shorting the dishwasher causing a small fire and leaking water damages the floors and finished basement walls. The insurance company and the fire marshal ask the current owner if they knew there was kitec, they say they asked the seller, and they were told there was none.

True, there is a certain amount of "buyer beware" at play. However, in asking about kitec, the buyer has tried to perform due diligence in uncovering any defects in the home they just purchased from you. It can't be assumed the buyer will know what Kitec is or looks like. They specifically asked you if there was Kitec and you said there was not. By not disclosing, wether directly asked or not; you place yourself at risk of being sued for damages, even after you've sold the home.

I would highly recommend that any buyer conducts a pre-purchase home inspection, or that a seller provides a pre-listing home inspection that lays out the condition of the home. A buyer's home inspector is likely going to discover the Kitec, so why not disclose in the first place? When a buyer comes back to a seller reporting that the home inspector has uncovered defects, specifically defects that the buyer had questioned the seller about, then it reduces the seller's negotiation power and challenges the trust-relationship. The buyer could walk away and any other interested buyers will now be sceptical of the home's condition and questioning why the deal didn't go through. It wastes a lot of time and risks a successful sale for the seller.

Had the seller disclosed the Kitec in writing or through the listing agent to the buyer agent/buyer, they mitigate their risk of being sued because the buyer has purchased the home well aware that Kitec was in use. If after purchasing the home the buyer chose to continue to use the home without replacing or remediating the defective materials; the burden of responsibility is on them.

Disclosing actually mitigates the seller's risk and helps to protect them.

You can apply the example above to any other defect, simply take out "Kitec" and insert any other defect and the related issues because the liability scenario goes pretty much the same for risks associated with aluminium wiring, knob and tube wiring, mould, structural damage, foundation cracks, other plumbing issues, roof leaks or structural issues, even a quirky appliance...essentially any of the myriad of defects that could be known to a homeowner planning to sell should be disclosed.

If the issue is significant enough that it compel's you to be inclined to hide it or not to mention it, then it is significant enough to potentially casue your buyer some challenge in the not too distant future.

Disclose! Mitigate an issue potentially coming back to bite you in the butt and the pocketbook. Disclosing at least shifts the burden of knowledge and responsibility to the buyer.

Disclose! Disclose! Disclose!

Thanks for reading. Questions or ideas for a future blog? Feel free to contact me here.

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Kevin Hartley, Broker is a Toronto based real estate Broker with Better Homes & Gardens Real Estate | Signature Service, Brokerage. @Home is his lifestyle blog, an expression of his passion for home keeping though MAKING (Recipes), DOING (DIY), BEING (Health/Wellness) and DWELLING (Home Ownership, Sales & Maintenance).  Content not intended to solicit clients under contract.

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