January 5th - 2010

LEGAL BEAT: PCDS/SPIS not a warranty

The buyers bought a house in Saskatchewan and received the seller's Property Condition Disclosure Statement (PCDS) that indicated there were no unrepaired roof leaks or moisture or water problems in the house, but also stated that there were previous backyard drainage problems which had been repaired to the best of his knowledge.

The buyers bought a house in Saskatchewan and received the seller's Property Condition Disclosure Statement (PCDS) that indicated there were no unrepaired roof leaks or moisture or water problems in the house, but also stated that there were previous backyard drainage problems which had been repaired to the best of his knowledge.

The buyers hired a home inspector whose report indicated finding moisture under a paint bubble on a wall and some basement seepage but that those were minor problems. The transaction was completed and there was significant ponding of water in the backyard in the spring causing extensive damage that resulted in a drainage system that cost $34,000. The buyers sued the seller for breach of contract and negligent misrepresentation.

The judge found that the PCDS became part of the offer but that the seller's statements did not warrant that there would be no water problems in the future. The PCDS was not a warranty. His failure to disclose the full extent of the previous basement seepage was not misrepresentation. He did not do anything to conceal any potential problems.

In any event, the buyers could not have relied on the seller's PCDS or any representations when they did their own inspections and relied on their home inspector. "Where a purchaser voluntarily assumes the role of investigator, such as employing of an inspector and no artifice is employed by the vendor to prevent discovery of the truth, the purchaser cannot be said to have relied on the vendor, even if the vendor was fully aware of material latent defects."

Stann v Lukan 2007 SKQB 366

MERV'S COMMENTS
Neither the seller or the REALTORS® were liable to these buyers. An honest seller should complete a disclosure form fully and honestly. Sellers and REALTORS® should insist that buyers hire their own home inspectors since they will not be relying on the sellers or REALTORS® for information or decisions.

Of course, if the home inspectors are negligent they should be liable to their buyers as in the recent Ontario case of Cresswell-Jones v Segouin.

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