How to use the mandatory form Declarations by the seller of the immovable
The mandatory form Declarations by the seller of the immovable (DS) must be used for all transactions involving the sale, by a natural person, of a chiefly residential immovable containing less than 5 dwellings, including immovables held in undivided co-ownership. For any transaction involving a divided co-ownership, brokers must now use the Declaration by the seller of the immovable – Divided co-ownership form (DSD).
The reason is simple: it is a great tool to help licence holders meet their duty to verify and learn, in accordance with generally accepted practices, about any factors that may adversely affect either party.
The broker must complete this form with the seller and have him sign it at the same time as the brokerage contract is entered into. This is done for the purpose of transparency as well as to protect the interests of the parties to the transaction. The seller must provide the information to the best of his knowledge; the form does not require the seller to declare something that he does not know.
If the seller is a legal person, the use of the DS (or DSD) form is strongly recommended, as this form contains information on the immovable that is essential to the drafting of a Promise to purchase, such as the nature of the water supply and sewer services. It is suggested at a minimum that the information pertaining to these services be obtained from the seller. For instance, a financial institution repossessing a property or a real estate developer operating within a company will need this information to sell an immovable.
Particular attention must be paid in the case of trusts, in order to determine whether or not the use of the DS (or DSD) form is appropriate. This will depend on the nature of the patrimony. In the case of a succession, this form is always mandatory.
To the best of the seller’s knowledge
The seller must provide answers on the condition of the immovable, to the best of his knowledge of course, clarify as necessary, and provide all documents in his possession in support of his declarations. If there are elements on which he has no knowledge or questions he is unable to answer, the reason can be explained under clause D14 of the DS form (or D15 in the DSD form), entitled “Details and major improvements to the immovable”.
This form must not be considered as the only means of meeting this obligation. The broker must also conduct all other possible searches and verifications in order to always be able to demonstrate the accuracy of the information he provides to the public and to other brokers.
At the signing of the brokerage contract
When taking up a brokerage contract, starting by collecting the information you need to complete the DS (or DSD) form is a great idea. The declarations made by the seller may contain elements that could have an impact on the opinion you had formed of the market value of the property or the marketing strategy you were planning.
The DS (or DSD) form must be completed jointly with the broker, as it is part of the broker’s verification obligations. Therefore it is very important that the broker be present when the seller answers the questions on the form. This way the broker can probe a little deeper concerning some of the items covered.
A seller may refuse to answer the questions contained in the form even if he has knowledge of certain elements, simply because he does not want to make any declarations on the immovable. If the seller refuses to complete and sign the DS (or DSD) form, or if he indicates on the form “I refuse to complete the form” and signs it (which amounts to the same thing), the broker simply cannot enter into a brokerage contract with this client.
The reason for this is that all declarations made by the seller on the immovable and any statement relevant to the transaction are part of the particulars that must be specified in a contract relating to an immovable, in accordance with the regulation. A broker violating this rule could be the subject of a disciplinary complaint, in addition to losing his entitlement to remuneration under his brokerage contract (section 20 of the Regulation respecting contracts and forms).
At the time of the transaction
The DS (or DSD) form submitted to a buyer must be annexed and referenced under clause 13.1 of the Promise to purchase form. Like any other document that forms an integral part of the Promise to purchase, the DS (or DSD) form and all related documents must be sent to the hypothecary lender. The latter may then set the terms of the loan to be extended to the buyer in full possession of the facts. This form will also be given to any inspector upon request.
Brokerage contract – Sale
The DS (or DSD) form is a mandatory annex that is part and parcel of these brokerage contracts. The broker must complete the form jointly with the owner and have him sign it at the time of signing of the mandatory Brokerage contract – Sale.
Promise to purchase
Any Promise to purchase must be supplemented with the mandatory DS (or DSD) form.
The DS (or DSD) form is an added value offered by real estate brokers in order to protect the interests of their clients, by minimizing the risk of legal action for sellers, and by allowing buyers to enter into a transaction with a better knowledge of the condition of the property. It also helps protect all licence holders, who have verification and disclosure obligations when it comes to providing information to the public concerning the properties they are offering for sale.
NOTE : More info on the DSD form can be found here: A new tool for an optimal real estate transaction! The Declarations by the seller of the immovable – Divided co-ownership form