Real Estate Talk: Importance of an accurate listing

One inaccuracy can stop the sale and discredit the seller

By Joseph Marovitch

Many people attempt to sell their own property without a real estate broker, not realizing that the rules set out by the real estate brokerage act, which is part of the civil code, applies to the seller, whether they are a broker or not. One of the rules is: the information regarding the property that is marketed to the public must be accurate and truthful. If the information is false or misleading, there can be many repercussions including the reversal of a sale even after the property has been signed at the notary.

If the seller is aware that there is a problem with the foundation, plumbing, electrical system, fireplace lining or any other issue that can significantly reduce the value of the property or the use of the property, and does not indicate this issue, and this issue cannot be verified in an inspection because it is a hidden defect, the buyer can take legal action to be compensated or cancel the sale of the property.

… the information regarding the property that is marketed to the public must be accurate and truthful.

Other issues that must be accurate are the measurement of the rooms. If the measurement for a bedroom is stated as 12 feet by 16 feet and the buyer discovers the bedroom is actually 8 feet by 12 feet after possession takes place, the seller will have a liability. The buyer can come back to the seller after signing and possession and sue for misrepresentation. The seller must insure that the buyer is not purchasing the property under false pretences.

To insure the information regarding the state of the property is accurate, sellers are supposed to complete a document called the declaration of the seller. The document asks a series of question regarding the structure, electrical systems, plumbing, air conditioning, heating and much more. The answer options are yes, no, or I do not know.

This form allows for fraud to be avoided but it will not protect a seller from being responsible for hidden defects in the property unless the seller sells the property without legal warranty. In the case where the promise to purchase and the deed of sale state the property is sold without legal warranty, the seller can sell the property “as is” and will not be held responsible for latent defects or any other issues, unless it can be proven that the seller was aware of the problem and did not disclose the issue. This is considered fraud.

‘The seller must insure that the buyer is not purchasing the property under false pretences.’

The downside of selling without legal warranty is that the buyer may think there is something wrong with the property, or that the buyer will negotiate a reduced price to compensate for any issues that may arise after possession since the buyer cannot go after the seller for compensation.

I would not advise selling without legal warranty except for the following conditions:

1. The seller inherited the property and never lived in it, therefore cannot know if there are issues with the property.

2. The seller is moving out of the country and it would be difficult to handle the situation form afar.

Next topic: Negotiation – All offers must be written. Verbal is only valid if there is a credible witness.

Should you have questions or comments, please refer to the comments section at the bottom of the page. As well, to view past articles, go to the search link and type in Joseph Marovitch.

Have a great week!

State of the market

The Montreal real estate market has been booming due to low inventory and a relatively stable economy. There are more foreign buyers and little talk of separation. Combine this with the fact there is very little space available to build on the island of Montreal and we are looking at a situation where prices will continue to rise, causing bidding wars. A bidding war is an event where there is more than one offer for a property causing the seller to sell for more that they were asking.

Eventually the market will taper off as the federal government increases interest rates, as always occurs in a booming market. For now, it is a sellers market.

Save the date: NDG Summer Festival

Food, Jewellery, Apparel, Music and Fun
Loyola Campus, August 24 to 26
I will be on hand at the Remax Action Inc. / Westmount Magazine booth to answer all questions.

Image: energetic.com

Read also: Real Estate Talk: Prep in August, sell in September