Edward L. Wilson of Lawson Lundell wrote this article for BCREA regarding the full and honest answers to the property disclosure statement that sellers must complete when selling a property in British Columbia.
In a recent Ontario decision the Court considered the Ontario Seller Property Information Statement (SPIS). As a result of ice build up a house had water damage that had been largely , but not completely, repaired. When selling the house later that year the Seller completed the SPIS with the following 3 questions that addressed the issue of water problems or damage:
*are you aware of any moisture and/or water problems? *are you aware of an damage due to wind, fire, water, insects, termites, rodents, pets or wood rot? *are you aware of any roof leakage or unrepaired damage?
The sellers raised the water issue with their agent, who dissuaded them from disclosing and making two points: the language of the question was in the present tense and there was no water damage at the time of signing the form.
The buyers found out about the water damage prior to closing and refused to complete the transaction. The house subsequently sold to another buyer at a lower price and the seller sued the first buyer for damages for failure to complete.
The Court found no rational argument for a “present tense” or “current” interpretation of the questions above and said the answers had to be complete and accurate and concluded the questions should be given a plain and common sense reading. The ourt concluded the answer “no” to the 3 questions was untrue but implied that if a “no” was checked off and further information about the damage and repairs had been added in the additional comments section, a different conclusion may have been reached. The Court found that, in light of the sellers’ failure to disclose the damage, the buyers had a right not to complete the transaction.
The purpose of the PDS is to put the purchaser on notice of a problem. If there is a problem, the PDS raises questions and concerns, rather than providing detailed answers. If in doubt whether something should be disclosed, it probably should be disclosed and, if appropriate, further details added to the additional comments section.
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