Seller Disclosure Forms
If you are selling real estate today you may be asked by your real estate agent to complete and sign a Seller Property Information Statement (“SPIS”). These forms are the product of the Ontario Real Estate Association (OREA). It is not a legal requirement that you sign these forms when you list your property for sale.
The Information Statement requires the property owner to answer numerous questions about the home. If the home owner elects to complete the form they may be undertaking a responsibility which they may later regret. Although some questions are clear and simple, others may require a legal opinion or are technical in nature and beyond the knowledge of the average home owner. A sampling of the more technical or legal questions are as follows:
- Does the subject property comply with zoning and if not is it legal non-conforming?
- Are there any pending real estate developments, projects or applications for zoning in the neighbourhood?
- Are there any public projects planned for the immediate area?
- Are there any defects in any appliances or equipment included in the property?
- Will the sale of this property be subject to G.S.T.?
- Is the property under the jurisdiction of any Conservation Authority or Commission?
- Are you are aware of any moisture and/or water problem?
- Is there any lead or galvanized metal plumbing on the property?
- Are you aware of any possible environmental problems or soil contamination of any kind on the property or in the immediate area (example: toxic waste, underground gasoline or fuel tanks)?
It is sometimes suggested that the home owner need not worry about answering the questions as the SPIS form contains a clause that it is being provided for information purposes only and that the SPIS is not a warranty as to the matters recited in the form. Even if there are no warranties the statements can well be construed as representations and if the statements are not true they may entitle the Purchaser to rescind or cancel the purchase contract if the representation was innocently made or entitle the Purchaser to sue for damages if the representation was reckless or negligently made.
There are a number of court cases in Ontario dealing with Seller’s Statements but one that illustrates the potential problem for a Seller is an Ontario decision, Swain vs. Robertson. The facts in this case were that a year before the sale the Sellers had experienced leaking in the basement but had taken steps to correct the problem. They had signed a Disclosure Statement confirming they were not currently experiencing water problems – they also stated that there was no history of cracks or water in the basement. The Purchasers had a home inspection done and even though the reports stated that repairs would be required to the foundation to stop water leakage they did not do any further investigations and completed their purchase. The court held that the Sellers had made a false statement knowing it to be untrue or at least indifferent to its truth with the intention to mislead. The court rejected the Sellers argument that the statements made in the Disclosure Statement were of no legal effect.
If you feel compelled as a seller of real estate to complete a Seller Property Information Statement then it is recommended that whenever you are not absolutely certain about the question select “unknown” on the form or seek the guidance of your realtor or lawyer.