What is the purpose of the declaration by the seller?
The Declarations by the seller of the immovable, more commonly known as the "Declarations by the seller", is a form of great importance to both the seller and the buyer of a property.
Like the certificate of location, the declaration of co-ownership, and the mortgage deed, it's a document you're bound to come across during your real estate transaction. That's why it's imperative that you fully understand all of its aspects and implications. Read on to learn everything you need to know about this real estate document.
What is the Declaration by the seller?
Created by the OACIQ, the Declarations by the seller is a form used to draw up a portrait of the property being sold. The seller must answer "yes" or "no" to the best of his or her knowledge, adding details as necessary.
It's sometimes referred to as the property's resume. It should be as complete as possible, based on the seller's knowledge and good faith and must include all information that could affect the value of the house: its condition, history, etc. The main purpose of this document is to protect the rights of the buyer.
The primary purpose of this document is to protect both parties involved in the exchange of a property. In other words, it protects both the seller who fills it out and the buyer who consults it.
Protection for buyers and sellers
Properly completed, the Declarations by the seller reduces the seller's liability for the quality of the property and protects against potential claims.
By stating, in good faith, the elements that may affect the condition and value of the property, the seller reduces the risk of being held liable if hidden defects are discovered. While not a complete guarantee against recourse, the seller's declaration remains a valuable protection.
For the buyer, it also provides a degree of security as to the condition of the property due to the many details it contains. The seller's disclosure enables the prospective buyer to make an informed decision about the purchase by identifying factors that may affect the transaction.
If the buyer and his broker have doubts about the declarations, and these doubts are confirmed after appropriate checks, it may be possible to add additional conditions to the promise of sale.
Is it enough to guarantee the condition of the property?
Although the purpose of the form is to provide as accurate a description as possible of the condition of the property, it should in no way be considered the sole guarantee of the quality of the immovable. The buyer should always use additional resources to verify the actual condition of the building and to identify other potential problems that the seller may not have mentioned or been aware of.
To this end, it is strongly recommended that you use the services of professionals, such as a building inspector, to conduct a proper pre-purchase inspection. It's a valuable extra layer of security.
What information is included in the Declarations by the seller?
The seller, in conjunction with their real estate agent, must ensure that each section of the form is completed. If necessary, checks can be made (land registry, previous inspection reports, etc.) to ensure that all the information contained in the document is accurate and to avoid the risk of being held responsible for a false declaration.
To provide the most complete picture of the property, the Declarations by the seller must include the following information, in addition to the identification of the seller:
- Year the property was built;
- Year of purchase;
- Current mortgage status;
- Deed restrictions;
- Condition of roof, plumbing, heating and electrical systems;
- Property problems (water damage, soil contamination, structural problems, etc.);
- Renovations and work done;
- Presence of a high-risk area (e.g., flood zone);
- Rental income, if any.
If renovations have been made and any of the problems mentioned have been corrected, it may be worthwhile for the seller to provide proof to support their statements (e.g., an invoice).
Once completed and signed, the document is attached to the offer to purchase and given to the mortgage lender so that the latter can make an informed decision on the terms and conditions of the loan granted to the buyer.
Example of the OACIQ form
Would you like to have a more concrete idea of what this document looks like? On the OACIQ website, you will find a sample of the Declarations by the seller, with all the information that must be included. Please note that to avoid any ambiguity, most of the questions only require a yes or no answer.
Is there a specific form for condominiums?
There is a separate form for divided co-ownership (condominium) transactions. The real estate agent involved in such a transaction must complete the Declarations by the seller of the immovable – Divided co-ownership form.
Although similar to the usual form, this document includes condo-specific questions, such as the contingency fund, condo fees, etc. It also provides a more precise framework for transactions involving shared ownership.
Is this document mandatory in Quebec?
This form is automatically used when the seller uses the services of a real estate agent.
In fact, as of July 1, 2012, the Declaration of the seller is a mandatory document for any transaction involving an OACIQ licensee. It is also mandatory for the sale of land or a residential building with less than 5 units (including buildings held in undivided co-ownership).
All offer to purchase in this type of transaction must therefore be accompanied by the seller's declaration appropriate form. If a seller refuses to provide the required information and sign the required form, his real estate agent will not be able to represent him.
For properties with 5 or more dwellings, mainly commercial buildings and land without buildings, the Declaration of the seller is not required but is strongly recommended by the OACIQ.
When to request or submit the Declaration of the seller
The Declarations by the seller must be presented by the seller and his or her agent to a buyer when the buyer expresses the intention to make an offer to purchase. The form must then be signed by the prospective buyer and attached to the offer to purchase.
The document can also be given to the building inspector to help him prepare a detailed inspection report on the property.
The seller has never lived in the house: what must he declare?
The seller may never have lived in the property. This can happen in the case of the death of a relative, when the house is sold by the estate, without legal warranty, or in other cases.
Of course, the seller does not have to declare information that he does not know. However, the seller is obliged to fill in the Declarations by the seller, stating in the appropriate section the reasons why he cannot answer any of the questions on the form.
What are the consequences of providing false information?
If the seller makes a false declaration, the buyer can take legal action against the seller. Even if the sale was made without a legal warranty.
The defrauded buyer has several options:
- Cancel the contract of sale, which implies the refund of the purchase price and the return of the property;
- Sue for damages, so that the seller can financially compensate the buyer for the damages suffered;
- Perform corrective work, at the seller's expense, to correct problems not disclosed in the seller's statement.
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