Disclosure and Professional Conduct

🔍 Disclosure, Caveat Emptor, and Best Practices in Alberta Real Estate (Calgary Context)

In Alberta, and specifically in Calgary, real estate transactions are shaped by a combination of regulatory disclosure requirements, the legal principle of caveat emptor (buyer beware), and established industry best practices. Understanding how these concepts work together — and where they diverge — is essential for licensees representing sellers or buyers.

⚖️ Caveat Emptor and Its Limits

Under caveat emptor, the buyer is expected to conduct their own due diligence when purchasing a property. Sellers are not automatically obligated to disclose all information about the property — especially visible or discoverable defects. This is why home inspections, document reviews, and legal advice are so critical in Alberta real estate.

However, caveat emptor is not absolute. There are important exceptions where disclosure becomes a legal and professional obligation.

🧱 What Must Be Disclosed — And By Whom?

Alberta’s Real Estate Act Rules (Section 55) and common law require disclosure of two major types of information:

1. Material Facts

A material fact is any information that could reasonably influence a buyer’s or seller’s decision to proceed with a transaction.

Examples include:

• Potential or upcoming special assessments
  
  

• Environmental hazards (e.g., asbestos nearby)
  
  

• Structural or mechanical concerns (even if visible)
  
  

• Changes to insurance, condo fees, or HOA restrictions
  
  

• Bylaw violations, zoning changes, or legal disputes
  
  

💡 Licensees are required to disclose these if known, even if the seller is not legally obligated under caveat emptor.

2. Material Latent Defects

These are a special category of material facts. A material latent defect is:

• Not visible or discoverable through reasonable inspection, and
  
  

• So serious that it renders the property dangerous or unfit for normal use or habitation
  
  

Examples:

• Mold behind walls
  
  

• Foundation damage concealed by renovations
  
  

• Illegal electrical work hidden behind drywall
  
  

🛑 These must be disclosed by both the seller and the licensee — even in an “as-is” sale, and even if the buyer waives all conditions.

📝 Why Seller Disclosure Forms Are Not Used in Calgary

In some markets (e.g., Lloydminster or Saskatchewan), boards may encourage or require seller-completed disclosure documents, such as a Property Disclosure Statement (PDS). These forms ask sellers to answer detailed questions about the property’s condition.

However, in Calgary (CREB jurisdiction), these forms are not used, and for good reason:

• Sellers are not experts. Asking them to speak to electrical, structural, or legal issues can result in incorrect information — even unintentionally.
  
  

• No legal obligation to complete them. Alberta’s disclosure framework does not require sellers to complete general disclosure forms beyond what is mandated by law (e.g., latent defects).
  
  

• They create risk. If a seller fills out a form incorrectly, it can create liability even if the omission or error was innocent.
  
  

Instead, Calgary licensees focus on:

• Disclosing known material facts as per Section 55
  
  

• Identifying and disclosing any material latent defects
  
  

• Advising sellers to seek legal counsel when in doubt
  
  

• Encouraging buyers to complete independent inspections, reviews, and searches
  
  

🧭 When and How to Disclose

📌 Timing

Disclosure must occur:

• Before receiving confidential information or signing a service agreement (Section 55(1))
  
  

• Immediately if any material change occurs later (Section 55(2))
  
  

Even if the buyer waives conditions (e.g., condo doc review), disclosure must still occur.

🗂 Best Practice for Documentation

1. Written Instruction
   
   

   • Complete the Exclusive Seller Representation Defect Disclosure Instruction Schedule
     
     

   • Retain it in the brokerage file
     
     

2. Written Disclosure
   
   

   • Deliver disclosure in writing (e.g., via email, document system, or offer attachment)
     
     

   • Disclosure is valid once sent, regardless of delivery method
     
     

3. Offer Integration (Recommended)
   
   

   • Include disclosure in Section 9.2 ("Other Terms") of the Residential Purchase Contract
     
     

   • Alternatively, attach a signed schedule to the offer
     
     

4. Time-Stamp and Archive
   
   

   • Record when and how the disclosure was delivered
     
     

   • Save all correspondence to protect the brokerage and client
     
     

📢 If in doubt — disclose. When the information is uncertain, potentially material, or subject to legal interpretation, the safest path is to disclose or advise the seller to obtain independent legal advice.