May 18th - 2005

Merv’s column: Tell what you know…and what you don’t

The buyer sued the seller after discovering large cracks in the basement foundation that caused a severe water problem in this Regina home.

The buyer sued the seller after discovering large cracks in the basement foundation that caused a severe water problem in this Regina home. The buyer also sued the REALTORS who acted for both the seller and the buyer, claiming that they failed to adequately examine the basement, misrepresented the home as being an "AAA" home in the listing, and failed to adequately explain and obtain true responses in a Property Condition Disclosure Statement.

The REALTOR said that she used the term "AAA" as describing how the property "shows" and that term had nothing to do with structural integrity. In any event, it was never discussed, questioned or even referred to by the buyer and his associate. The REALTOR suggested to the buyer that if he was concerned about the condition of the house he should require the seller to complete a PCDS and have it attached to the offer. That was done. She also suggested that he obtain a professional Home Inspection Report and Furnace Inspection Report but that suggestion was declined by the buyer and his experienced associate.

The judge decided that the cracks were a latent structural defect that the seller was aware of, and failed to disclose. The seller was liable. However, the REALTORS were not told, they did not know, and they had no way of knowing of the defects. They had no greater opportunity to know than the buyer and his associate. By suggesting professional inspections it "ought to have been apparent that (the REALTOR) was not claiming any particular knowledge or expertise regarding potential latent defects." The buyer relied primarily on the advice and expertise of his associate in the negotiations. He did not rely on the "AAA" term or on any representations by the REALTOR. The REALTORS won.

Johnson v Erdman 2002 SKQB 447

MERV'S COMMENTS
The REALTOR acted properly by suggesting that the buyer get a PCDS and inspections. The buyer was clearly relying more on his business associate, who had bought several properties in the past, than he was relying on the REALTORS. Moral: Tell them what you do know. Tell them what you don't know and suggest that they get professional assistance from someone who might know.

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