Disclosure Issues in Real Estate: What Buyers and Sellers Need to Know

September 2, 2025

When buying or selling a home in Ontario, disclosure plays a critical role in protecting both parties in a real estate transaction. In this blog post, we’ll break down what disclosure means, what is required under Ontario law, and common issues that can arise when disclosure is mishandled.

What Is Disclosure in Real Estate?

Disclosure refers to the obligation of sellers to inform buyers about certain known issues with the property. These can include but are not limited to:

Structural problems (e.g. issues with the foundation)
Water damage or flooding
Mould or pest infestations
Environmental contamination
Legal issues such as zoning violations or encroachments

In Ontario, there is no general duty to voluntarily disclose every defect. However, the distinction lies in whether the defect is latent (hidden and not discoverable upon reasonable inspection) or patent (visible or obvious).

Latent vs. Patent Defects

Patent Defects: These are visible on a reasonable inspection. The buyer is expected to discover these. Sellers are not obligated to disclose them.
Latent Defects: These are hidden and not discoverable through a typical inspection. If a seller knows about a latent defect that makes the home dangerous or unfit for habitation and does not disclose it, they can be held liable.

The Seller Property Information Statement (SPIS)

While not mandatory in Ontario, some sellers complete a Seller Property Information Statement (SPIS) which is a form provided by the Ontario Real Estate Association (OREA). It includes questions about the condition of the home, renovations, environmental issues, and more.

Caution: If you choose to complete the SPIS, you must do so truthfully and fully. Courts have held sellers liable for misrepresentation or negligent misstatement if inaccurate information is provided.

Common Disclosure Issues and Legal Risks

Undisclosed Water Damage – If a seller hides past flooding or leaks that have since been patched up, they may be liable if those issues reoccur or cause future damage.
Unpermitted Renovations – Renovations done without a permit or not up to code can lead to municipal fines or forced removal of improvements. Sellers should disclose these issues upfront.
Neighbourhood Nuisances – While not necessarily required, failure to disclose ongoing disputes (e.g., shared driveways, noise complaints) can sour buyer relationships and invite legal action.
Failure to Disclose Environmental Hazards – Properties with oil tanks, asbestos, or historical contamination may require cleanup under Ontario’s Environmental Protection Act. Non-disclosure could result in civil liability.

For Buyers: Protecting Yourself

Conduct a professional home inspection
Ask specific questions about prior issues or repairs
Request documentation (permits, warranties, inspection reports)
Consult your real estate lawyer early in the process

For Sellers: Reducing Legal Risk

Be honest and transparent about material latent defects
Avoid exaggeration or omissions in listings or SPIS forms
Keep written records of repairs and maintenance
Work with legal counsel to review disclosures before listing

Final Thoughts

Disclosure issues in real estate can quickly turn a smooth sale into a costly dispute. Whether you’re a buyer or seller, understanding your legal obligations can make all the difference.

At Delaney’s Law Firm our experienced real estate lawyers help clients across Ottawa navigate complex transactions, minimize liability, and protect their investment.

This blog is for informational purposes only and does not constitute legal advice. For advice specific to your situation, please contact a qualified real estate lawyer.