Law Times

Law Times • November 2, 2009 FOCUS Statements a recipe for litigation, lawyer warns Seller's information forms can prove costly BY DARYL-LYNN CARLSON For Law Times I t may seem to some that Bob Aaron is on a mission. Over the past several years, the real estate lawyer at Aaron & Aaron and founder of the Ontario Real Estate Law- yers Association has written ex- tensively about the perils facing property vendors who fill out a seller's property information statement as advised by the On- tario Real Estate Association. Most of his columns appear in the Toronto Star, for which he's a regular contributor. His main point is that some vendors who have signed the forms in earnest have ultimate- ly found themselves facing law- suits when things go awry. "The form is extremely com- plex and technical," Aaron says in an interview with Law Times. While the real estate association maintains it developed the form as a means to protect the public, Aaron says it's doing anything but that since many people are ultimately misled and end up facing costly lawsuits based on a document that doesn't come from a professional. "All it does is get people in- volved in litigation," he says. Real estate agents encourage vendors to fill out the forms as a way to disclose what they know about their property's history. Over the years, they have grown to three pages with 48 questions dealing with general informa- tion, environmental issues, and improvements and structural work to the property. Aaron says some of the questions are beyond the pur- view and expertise of the av- erage vendor. The form asks, for example, whether there are any public projects planned for the immediate area or wheth- er anyone has every used the property to grow or make ille- gal substances. As well, for many of the questions, Aaron says only a professional surveyor would be qualified to provide an honest answer. As for the one about illegal substances, he notes, "You've got an honest seller who's asked to know what's happened under all the previ- ous owners, whether it's ever been used as a grow-op or drug operation. How is anybody supposed to know that?" In his columns, he cites sev- eral matters in which the buyer has ultimately taken a seller to court based on the responses disclosed on the form. In one case, a homeowner in London who had commis- sioned repairs for water damage a year before posting his prop- erty for sale ended up in court suing a prospective purchaser who rescinded an offer to buy. In that case, the buyer received $48,000 plus GST against a le- gal bill of $75,010. In another matter, a woman who purchased a home in Thun- der Bay discovered moisture problems in the basement that the vendor failed to disclose in the form. While the sellers be- lieved earlier repairs had resolved any problems, the court awarded damages of $33,874.33 against them along with $2,000 for ag- gravation plus almost $20,000 in court costs. Aaron says in most of the cases he's written about, the real estate association blames the vendor either for incom- plete or false responses. "They say it was not the [information] form itself that caused legal difficulties for the sellers. It was the failure of the sellers to be forthright in their disclosures about the property. In other words, if somebody honestly answers the questions, they won't get into trouble. "But sellers have no idea how to fill out the form. If they're not liars, it's way too technical for the average person." As a lawyer, he advises colleagues representing vendors to not allow clients to fill out the form and instead obtain inspec- tions by professionals. For lawyers representing buyers, he suggests the same or that they ensure the purchaser can retain a litigation specialist in the event of a sale based on an information statement. Pauline Aunger, president of the real estate association, says the form is meant to be merely an "information statement." "It's not a warranty. It was TitlePlus_LT_Nov3_08.qxd 10/27/08 11:11 AM Page 1 never meant to be," she says. "It was created so sellers could give information about their house and buyers could get answers to questions they would normally ask. It is just the seller answering questions to the best of their ability." As an agent, she says she encourages all of her vendor clients to fill out the form but only to the "best of their knowl- edge. If there's something in the questionnaire about the property that you honestly don't know, you just have to clearly answer, 'I don't know.' You are simply providing the information that you do know so then the buyer can say, 'OK, I'll go find that out' if they want to know." Buyers, she notes, are always free to make their own inquiries and hire their own specialists to inspect and assess a property. She says the form has been useful for keeping up with trends such as one she's identified recently that's seeing baby boomers burying their back- yard swimming pools and then selling the property years later. "That's something that can be answered on the form. We see trends, and the form helps" to en- courage disclosure. But Aaron isn't convinced. "I in- tend to keep advo- cating for the pub- lic that this form is dangerous and shouldn't be used." Based on feed- Bob Aaron back he's received, some real estate brokerages have opted to ditch the form for sellers. It's not mandatory; it's merely a recommendation by real estate agents who may view it as protection for their own interests, he says. "My question to [the real estate association] is, who are they trying to protect?" he asks, suggesting that because the forms have been around for more than a decade, the in- dustry may simply be reluctant to change. LT PAGE 11 Built just for you Together we have all the tools The TitlePLUS® Program works with you to help protect your clients from title risks.1 assist you, through our legal services coverage2 real estate partner! result of an error or omission in your real estate transactions. 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