Disclosure: Shield or Sword...You Decide
Rhonda Heaslip | 17 April, 2007 18:22

I recently read a great little article by Jennifer Clee, Staff Lawyer for the Real Estate Errors and Omissions Insurance Corporation. In a nutshell she tells us this:

The Property Disclosure Statement or "PDS" was originally introduced to shield sellers and their representatives from lawsuits by lessening the risk of liability due to negligent misrepresentation. It is now also being used by buyers as a "sword" against the sellers. Often buyers have advanced claims against sellers based on the PDS supplied by the sellers for the transactions in question.

Clee states in the article that in a recent court decision, the judge made the following assertion: "The statements in the PDS...are not terms of the contract, they are representations. Clause 18 of the Contract of Purchase and Sale expressly provides this. These statements do not constitute a promise to do anything or refrain from doing something, they simply assert the existence of a state of facts."

She further summarizes that "While some buyers have attempted to use the PDS to create additional avenues for recovery, the courts have resisted this attempt and, for the most part, recognize the PDS for what it was meant to be - a document containing representations as to the sellers' knowledge of the property."

As a Realtor I always advise my Sellers to answer the PDS questions honestly and to the best of their knowledge. If the answer is " I don't know" then that is the answer. I believe the PDS is a very useful and helpful part of any contract and should be used. It will, in the end, prove to be of benefit to both buyers and sellers. What do you think:sword, shield....or both?

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