O.k, so 1993 is a little before my real estate days, but Blair (my husband) was licenced then and the two of us formed an opinion quickly about a new form then introduced by Real estate boards and agents across the country. We agreed that the form would never benefit our Seller clients, but agents did and still do continue to promote the use of it and we come across them regularly in our day to day business.
What is this form that we don’t ever have our clients sign? A property disclusure form or Seller Property Information Statement (SPIS) as it is known in Ontario. An extremely detailed questionnaire about your home and it’s inner workings. Here are some of the questions on the form and then my thoughts on some potential problems.
9. Are you aware or any pending developments, projects or rezoning applications in the neighbourhood?
Do you know about every project that is going on in your neighbourhood? Do you read all the signs that are posted, check with the township office regularly or read the notices that come in your mail?
12. Are there any drainage restrictions?
Are you allowed to install the patio and gardens. If you move any soil around you are altering the drainage for your neighbourhood and you might not be permitted to do that.
21. Will the sale of this property be subject to HST?
You are likely not an accountant and not able to answer this question. Sure we can all take what the websites say, but HST can be a tricky subject. If you are selling your house and the tractor, all furniture and an old car, will HST be applicable? Better leave this question to the professionals.
1. Are you aware of possible environmental problems or soil contamination of any kind on the property or in the immediate area? eg: radon gas, toxic waste, underground gasoline or fuel tanks etc.
Here’s a tricky one. Sure you know about radon in Port Hope and you can see the car wreck yard and assume there may be an issue there, but do you know if your neighbour or the guy two doors down has an underground oil tank? Can you answer with absolute certainty?
5. (a) Are you aware of any deficiencies or non-compliance with the Ontario Fire Code?
Who even knows what the fire code says? You may know what it says today, but they make changes to codes all the time, how up to date is your knowledge?
12. Is there any lead, galvanized metal or cast iron plumbing on the property?
Notice that this question doesn’t just ask about your interior plumbing, but all the plumbing on the property. Do you know what material was used from the city service at the road to your house?
There has been an explosion of litigation from the SPIS since its introduction. Since the forms were first introduced around 1993, there have been 49 reported court decisions resulting from the use of the SPIS in Ontario, and a further 153 from the other provinces and territories, for a total of 202 cases. I do not know any other single document that has accounted for so many litigations in the same time period.
Typical of the lawsuits seen is one that involves a seller and buyer in Hamilton, Ontario. The seller completed the questionnaire at the request of their REALTOR®. Beside the questions for the type of wiring in the house, the seller had the options to check off one of four options: copper, aluminum, knob and tube or other. There is a space beside the word “other” where the sellers could have filled in “unknown,” but instead they checked off “copper” and left a blank in the space beside “other.”
After the purchase transaction had closed, the buyers discovered that the house had both aluminum and copper wiring. They sued for damages representing the cost to remove the aluminum wiring and replace it with copper.
The judge accepted that the Sellers actually believed that the wiring was all copper and that they did not deliberately or fraudulently mislead the buyers. Nonetheless, he determined that their answer was based upon “a thin premise, an assumptions, a guess, really, based upon the age of the building….made without doing any checking to ascertain if the answer was accurate, and this assertion amounted to a negligent misrepresentation.”
In the end, the judge was not happy with the actions of either the buyers or the sellers. Even though he found the sellers responsible for misrepresentation, he said the buyers were partly the cause of their own misfortune since they should have conducted a more thorough investigation of the wiring issue that concerned them so much. This seems to the the first case in which a judge found the sellers and buyers equally at fault. As a result he reduced the damages by 50%, awarding the buyers only $3,556.88 and costs.
It amazes me that even though there is real proof of a problem (more than 200 SPIS cases), REALTORS® are still advising their clients, people they are supposed to be protecting, to complete the form! If you are thinking of selling your home, please take a look at what you are signing, ask questions and make sure you are comfortable with the agent who is helping you.