BC Court of Appeal Decision: Sewell v Abadian, 2025 BCCA 158

The BC Court of Appeal released its decision considering a crossed-out property disclosure statement (the “PDS”) used in a residential real estate transaction. In this case, all individual items in the PDS were crossed-out, and there was a single notation in the comments section stating “Tenanted Property, Owner has never occupied”. There was no doubt that the current owner had never occupied the property at issue and that it had been tenanted throughout the current owner’s ownership. 

The purchaser made a subject-free offer to purchase the property which was accepted by the seller. The purchaser later found out that the family room of the property had been enclosed without a permit. 

Despite the fact that the specific item regarding permits was crossed out, along with all other specific items in the PDS, the purchaser attempted to repudiate the contract on the basis that the PDS misrepresented to her that the seller had no knowledge of any permitting issues with the property and she was induced to enter into the contract of purchase and sale based on that misrepresentation. The seller refused to accept the purchaser’s repudiation and took the position that the contract of purchase and sale remained binding on the parties. When the purchaser refused to pay the second deposit installment, the seller terminated the contract on the basis of the purchaser’s material breach. 

The purchaser sued the seller for return of the first deposit installment and the seller counterclaimed for the second deposit installment. 

Supreme Court Decision: Sewell v Abadian, 2024 BCSC 1116 

The chambers judge concluded that the seller made no representations in the PDS, except that the property was tenanted and he had never occupied it. The chambers judge held that this comment must be read together with the refusal to answer any of the standard questions. The chambers judge reasoned that it could not imply a representation that the seller did not know the answer to any of the questions when he had not answered any of those questions with “Do not know”. The PDS could not contradict itself.  

The chambers judge further held that the fact that the purchaser provided affidavit evidence that she was concerned about the “total lack of information” in the PDS meant that she understood the seller had not provided any information in response to questions in the PDS. As a result, and on her own evidence, she was not induced by the PDS to enter into the contract of purchase and sale. 

The chambers judge concluded that the purchaser made a subject-free offer to purchase the property in the face of a PDS that disclosed nothing and minimal information obtained by her realtor. The seller was not under a duty to disclose anything that was not required by the contract of purchase and sale, and the purchaser’s decision to forgo a term of that contract that would have made the sale subject to an inspection or her approval of any non-conforming aspects of the property did not impose a higher duty on the seller. 

Court of Appeal Decision: Sewell v Abadian, 2025 BCCA 158 

On appeal, the purchaser argued that the comment “Tenanted Property, Owner has never occupied” changed the nature of the crossed-out items from a refusal to make any representations about the individual items in the PDS to a representation that the seller had no information about these individual items. Since there was evidence that the seller did know that the family room had been enclosed without a permit, crossing out the specific item regarding permits was a misrepresentation. 

The Court of Appeal agreed with the purchaser that the PDS, as a whole, was a misrepresentation that the seller had no knowledge about any permitting issues with the property. The decision is only 13 paragraphs long, and does not cite any case law, so it is unclear whether this decision stands for the proposition that a crossed-out PDS will always be seen to be a misrepresentation if the seller has knowledge regarding the items they have crossed out or whether it is only in the case where the seller also provides a note that the property was tenanted and the owner has never occupied the property in addition to crossing out all standard items that crossed-out items will be interpreted as meaning the seller has no knowledge about the individual items.  

Impact of this Appeal Decision 

The Court of Appeal’s conclusion that items that have been crossed-out in the PDS can be a representation that the seller does not know the information about the item that was crossed out has significant implications for real estate licensees in the province. It is a standard practice for many real estate licensees to recommend that sellers cross out all items in the PDS and note that a tenanted property has not been occupied by the owner. Until today’s decision, this was generally understood in the industry to mean that a seller was not making any representations about the individual items that were crossed out, but not necessarily that the seller had no knowledge of the specific items that were crossed out. 

Given today’s decision, the standard practice engaged in by real estate licensees should be changed such that a seller does not provide a PDS when the seller does not want to make representations about a property. Sellers should no longer rely on a crossed-out PDS to communicate that they are not making representations about the property. 

The full decision can be found on the Court of Appeal’s website and is linked here: https://www.bccourts.ca/jdb-txt/ca/25/01/2025BCCA0158.htm