I have received numerous phone calls of late with respect to seller disclosure requirements. First off, I would think that this is an area which is legislated provincially, and not federally so the requirements would probably differ from state to state and province to province.
I will endeavor to address disclosure requirements within the Province of Alberta since that is the province in which I am licensed. In this province at least, sellers are required to disclose all facts about the subject property which are known to them which would require considerable expense to remedy and are not readily visible by way of routine inspection by an averagely prudent buyer. The mere claim by the seller that they were unaware of a hidden defect is not grounds enough to escape this requirement if the courts deem that the seller ought to have known. This responsibility of disclosure passes to the real estate brokerage/agent listing a property with hidden defects. Again, the mere denial of knowledge by the agent may not be reasonable under the circumstances, given their level of experience, if the defect could and should have been detectable.
That being said, a buyer has every opportunity to protect oneself by contracting the services of obtain a home inspection performed by a reputable and qualified home inspector prior to finalizing the sale. This would be a far better approach than to rely strictly on the seller or their agent to disclose all relevant details because that is what is required by law. They may very well argue that they weren’t aware of any substantial defects, and the onus may well be on the buyer to prove otherwise.
You are well advised to do your due diligence beforehand, and at least take comfort in the fact that you did do everything you could to protect yourself a fact that will not be overlooked by the judge in a subsequent law suit.
There is also the question that even if you win your case against the seller, that you may not be able to collect from them, if you can even find them or should they be in the process of bankruptcy or foreclosure, or have no assets that you may readily attach your claim to. It is not up to the courts to enforce judgments and the collection of a judgment against a non-cooperating seller may be as difficult to achieve as the judgment itself was to obtain.
There is more and more political pressure in making the Home Inspection companies accountable for their reports which they previously attempted to avow any responsibility for. It is now being argued and very often successfully challenged, that home inspection companies cannot just shirk of the responsibilities for which they are being paid by the insertion of a “non-responsibility” clause in their contract. This will make it easier for home buyers in future to successfully recover all or part of their damages. There is also a pretty good chance that Home Inspectors may soon be regulated under the Real Estate Act of Alberta, and regulated as to their educational and performance requirements.
Buyers ought to seek the advice from their REALTOR® with respect to home inspections prior to making a purchase and to seek advice from their lawyer at any time, or if hidden defects are subsequently detected.