Even a Crossed-Out Property Disclosure Statement Can Constitute Misrepresentation

A recent British Columbia Court of Appeal decision sheds light on how a crossed-out Property Disclosure Statement (“PDS”) may be interpreted in the context of a real estate transaction. Typically, a PDS supplements a Contract of Purchase and Sale by providing information of interest to the buyer that is not otherwise included in the contract. While crossing out the entire PDS is often used to indicate that the seller is making no representations about the property, the following Court of Appeal decision calls that assumption into question.

In Sewell v Abadian, 2025 BCCA 158, the buyer entered into an agreement to purchase a home from the seller. As part of the agreement, the seller delivered a PDS with a line through all of the questions, including one regarding unpermitted additions. However, the seller was aware when he purchased the property that there was an addition. In particular, an outdoor porch enclosed as a family room, had been completed without permits. The seller had acknowledged, in a text message to the buyer’s realtor, that the family room “is/was addition” and an “unauthorized accommodation”, but the realtor failed to read that portion of that message. The seller also included a note in the PDS stating, “tenanted property, owner has never occupied”. The buyer made a subject-free offer, which was accepted by the seller. Through her own efforts, the buyer discovered that there was an unpermitted addition to the home which had been completed without the required permits and attempted to repudiate the contract.

The buyer sought to repudiate the contract on the grounds that the seller had misrepresented having no knowledge of any unpermitted additions on the PDS and that she was induced to enter the contract as a result of that misrepresentation. The seller refused to accept this repudiation and refused to return the deposit and demanded payment of the second installment. The buyer sued the seller for breach of contract, negligent and/or fraudulent misrepresentation and failure to disclose a latent defect. At the trial level, the court found that the seller had provided the necessary information prior to the closing date and made no representations in the PDS other than noting that the property was tenanted and never occupied by the owner. There was no evidence that the buyer had relied on the PDS, and without such evidence, the existence of an unpermitted addition did not amount to a latent defect. As a result, the court held that the seller was entitled to retain the deposit and ordered the buyer to pay the remaining balance.

However, on appeal, it was determined that a PDS that has been struck through by the seller and provided to the buyer does not, as previously believed, indicate that “no representations are being made.” Instead, it constitutes a representation that the seller has no knowledge regarding the items that were struck through. If it is later revealed that the seller did, in fact, possess such knowledge, this would amount to a misrepresentation.

Key Takeaways:

This decision has significant implications for property owners, including executors selling real estate. Executors often follow various common practices, including submitting a fully crossed out PDS with a note indicating it is an estate sale and that the executor lacks direct knowledge of the property’s condition. However, in light of the Court of Appeal’s ruling, sellers, including executors selling a property, should reconsider providing a PDS at all. Simply crossing out the form and adding general disclaimers may no longer offer sufficient protection, as doing so could still be construed a misrepresentation.

The link to the full decision is available here.

When managing assets as an executor, it is important to speak to a legal professional who can highlight potential issues and assist with proper administration. Our wills and estates lawyers at Harper Grey LLP can assist you with all of your estate planning needs. Please contact us to discuss more.