The Role of Seller Property Information Statements

Posted on: Wednesday, February 15th, 2012

I am often asked what my opinion is on whether Seller Property Information Statements (SPIS) should be used in a real estate transaction.

This question has become more common in the past year, after recent court decisions where real estate agents were held to have not discharged their obligation to properly inform the purchaser about defects with the shanghai property. It is interesting to note that the debate has centered around the SPIS even though it wasn’t even used in all the cases giving rise to this debate.

What is common to the recent caselaw is the reliance by the judges on the Real Estate Agents Code of Ethics. It is important to note that a contributing factor was that in the majority of the cases where negative findings resulted against the real estate agents the agents were double ending the transaction.

In my opinion whether an SPIS is involved or not is not the key question. The important question is: did the real estate agent discharge his/her obligations to their clients or customers?

In Ontario, real estate agents are governed by the Real Estate and Business Brokers Act, 2002. Under this legislation, agents are required to demonstrate reasonable knowledge, skill, judgment and competence in providing opinions, advice or information. In addition, agents are required to advise a client or customer to obtain services from other persons if the agent is not able to provide the services with reasonable knowledge, skill, judgment and competence or is not authorized by law to provide the service.

While a SPIS can assist agents in discharging their duties under the Code of Ethics, it is not a full response to an action against an agent. Undue reliance on the SPIS can even be the reason for the agent not fully discharging his or her obligations.

I would suggest that was the situation in the decision out of Sudbury last year. This decision is an example of an agent placing too much reliance on the SPIS, resulting in the judge finding that the agent failed to properly discharge her obligations to both the buyer and the seller.

The question should not be whether or not an SPIS should be used in Ontario. The proper question is what is the obligation of the real estate agent to both the purchaser and the seller and how best should that obligation be discharged. If the agent feels the SPIS will assist in discharging that duty then it should be used as a tool to ensure the agent’s duties are fully and properly discharged.

If you have any questions about this article, I invite you to contact me at shari@elliottlawyers.com.

The content of the articles in this blog are intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

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