Buyer Wins Back $300K Deposit in Landmark Real Estate Disclosure Case

In a pivotal decision from the British Columbia Court of Appeal, the case of Sewell v. Abadian reaffirms the legal obligation of sellers to provide full and honest disclosure when selling residential real estate.

The dispute arose when Carolyn Sewell agreed to purchase a property from Ehsan Abadian. As part of the process, Abadian provided a Property Disclosure Statement (PDS) with all questions struck through and a comment stating, “Tenanted Property, Owner has never occupied.” However, Abadian—an experienced real estate professional—knew the property had an unpermitted addition, which had been disclosed to him when he purchased it.

After discovering the unpermitted addition herself, Sewell refused to complete the purchase and sued to recover her initial $300,000 deposit. Abadian counterclaimed for the remaining $200,000 deposit. The trial judge sided with Abadian, interpreting the PDS as a refusal to make any representations.

On appeal, however, the court found that the trial judge failed to consider key facts, including Abadian’s real estate background and prior knowledge of the unauthorized addition. The Court ruled that by choosing to submit a disclosure form, even with crossed-out answers, and by signing it as part of the contract, Abadian made a misleading representation.

The Appeal Court allowed Sewell’s appeal, awarded her the return of her $300,000 deposit, and dismissed Abadian’s counterclaim.

The Takeaway

This case sets a new precedent: sellers can expect to be held to a higher standard when it comes to completing the Property Disclosure Statement (PDS). Simply claiming “I’ve never lived there” is no longer enough to sidestep responsibility. If a seller has knowledge—whether from past ownership, prior disclosures, or experience—they are expected to share it. The era of drawing a line through the PDS and avoiding liability may be coming to an end. Transparency isn’t just good practice—it’s legally essential.