Thursday 27 August 2015

Disclosure Statements in Real Estate

Disclosure Statements are a common term in real estate, but the term can actually refer to two very different documents.

When you buy a home the seller most often has completed a "Property Disclosure Statement". This is a real estate board form which provides answers to set questions regarding a property. A Seller can choose how many of the questions to answer or even if they want to fill out this form. It is signed by the Seller and at the time of a sale can also be signed by the Buyer as having been read and accepted. This becomes a binding part of the contract and holds the Seller accountable to the answers provided.

When buying a property that is part of a development, there may also be a "Developer's Disclosure Statement", but this is a document prepared for the developer by a lawyer. This Disclosure Statement will include various rules for the development as well as any easements or covenants placed on the land. It may also include a Building Scheme - explaining what the rules are for building a new home. Examples of some of the things to be found in this type of a Disclosure Statement is no clotheslines; no front yard fences; landscaping or lawn requirements; lighting requirements; driveway requirements and even house building standards (siding, roof line, etc). These Disclosure Statements are not just found in residential neighbourhoods. Many more remote developments, where a Seller has parcelled off a number of lots in a development, will have a Developer's Disclosure Statement. This may cover things such as how long a recreational vehicle can be parked on the property, whether a mobile home can be put on the property, how access is to be used, etc. There may even be a Building Scheme, if the developer wants a certain look to the development, such as cottage specifications or no two level homes. If a property has a Disclosure Statement then the Contract of Purchase and Sale must acknowledge the Buyer's receipt of the document as well as any subsequent amendments, prior to being presented to the Seller/Developer. A contract should not be prepared on a property until the prospective buyer has had the opportunity to read and acknowledge the Disclosure Statement.

It is important in all cases to make sure you are aware of Disclosure Statements, as they can have a big impact on how you use the property you are interested in purchasing.
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