April 8th - 2005

LEGALBEAT: Sump pump revealed

A seller has a water problem and her husband "fixes it." Several years later she sells the house.

A seller has a water problem and her husband "fixes it." Several years later she sells the house. Should she tell the buyers that there used to be a problem? A REALTOR® knows that there is a sump pump. Should that be disclosed even if the usual Property Disclosure Statement (PDS) doesn't have that as a specific question? Consider the following example.

This New Brunswick seller completed a PDS that became part of the Agreement of Purchase and Sale. It did not mention a sump pump under the front step of the property. The judge said that the purpose and intent of the PDS requires the seller to disclose any water and moisture problem and to tell the prospective purchasers how the problem was solved. The seller also verbally told the buyers that she had never experienced any dampness in the downstairs, where there are two bedrooms.

Under these circumstances that was a misrepresentation. The buyer did not ask any questions about the presence or absence of a sump pump. He said, "No, I expected it to be voluntary." At the time of the Listing, the REALTOR® did not see any moisture damage and smelled nothing in the basement. After the PDS was signed the seller told him about the sump pump but he felt no obligation to amend the PDS or to disclose the existence of the sump pump to the prospective purchasers or their real estate agent. He said, "Nobody ever mentions about a sump pump", and "I never thought twice about it."

When asked whether he discussed it with the selling agent he said, "It never came up." He also said, "There's no spot on the disclosure." The judge noted that there is an area on the PDS for "Additional Comments and/or Explanations."

Hansen and King v Seeley 2003 NBQB 49

MERV'S COMMENTS
The judge commented that, "A purchaser of real estate should not have to go behind and second guess the answers to the questions contained in a Property Disclosure Statement. It is the vendor's duty to answer the questions honestly and to disclose. It is, after all a Disclosure Statement."

The form may not be mandatory, but once given it should be honest - and complete, especially when attached to the Offer. Whether in writing or orally, tell the whole truth.

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