Seller Property Information Statement Updated and Revised

The common rule of thumb among the legal community is “don’t sign one”.

That’s basically good advice, but it may be a little out of date.

The basic SPIS document has been revised and updated.

The Court cases which deal with the SPIS documents, even if they are current cases, deal with older SPIS Forms. The important matter to note, is that they have been updated and replaced.

So, simply to say that the SPIS document should never be signed is really an indication that one may not be familiar with the current version of the Form, now in present usage, introduced in 2013. Now, that’s not always the case, but in many circumstances, it is. 

Progress has been made. My concern had always been that the questions posed were often prolix and complicated, and often required a reply by a professional, not the ordinary seller of a property. Many of the questions have now been updated and modified.

Let me give you an example:

Ownership Question:

2. Does any other party have an ownership, spousal, or other interest in the property?

Here are some comments that I had made about this question:

This is an interesting question. To answer this correctly, you really should have a law degree. In any event, the seller is likely to know whether there is another name on the title. So, if this property is owned by the seller and his wife, mother, brother, or business partner, this is the time to say so.

Ownership interest is not restricted to registered ownership. The owner on title was the easy question. What about any beneficial owner? What if the seller is conveying by way of an estate? Might any of the beneficiaries have an ownership interest? Sometimes they do! If so, this is the time to say so.

What about the spousal interest? This is someone who has some rights under the Family Law Act. Are you familiar with the Act? Do you know who may have rights? Do you know who may claim to have rights, even if they are unlikely to be upheld by a Court?

First, there’s the seller’s own spouse provided they are not registered on title and the property qualifies as a matrimonial home. What if seller holds the property in joint tenancy with another person other than the spouse? The joint tenancy in that matrimonial home is deemed to be severed in the event of death. Even if the seller is alive and well, you should be prepared for the contingency that death may occur before closing. A complete answer would require this disclosure.

If the seller fails to mention that, and is sued for some other reason, then on an examination for discovery, the seller is likely to be asked this question, not because it’s relevant to the matter under consideration, but rather because it’s relevant to the truthfulness, completeness and accuracy of the answers. And, that is a matter which is always relevant.

Further, there is the matter of “other interest”; just what does that mean? It should reasonably include:

• Mortgages and other encumbrances
• Restrictive covenants and other related private deed regulations
• Easements in favour of the municipality and utility companies
• Rights concerning adverse possession and prescriptive rights-of-way
• Encroachments by adjoining properties (below the surface, at the surface and in the air), ie. pipes for drainage, fences and eavestrough
• Liens, for example, construction liens or vendor’s liens or other equitable liens
• Local improvement rates (and for that matter municipal taxes)
• Judgments and executions
• Rights by way of prior agreements etc.

However, that was where the SPIS document stood several years ago. The current provision is as follows:

2. Does any other party have an ownership or spousal interest in the property?

You will certainly appreciate that my major concern about the question initially had been the “other interest”, and that part of the question has now been deleted. So far, so good!

This really means that you need to keep an open mind, and know what the current forms say.

Naturally, the debate continues, but you should be speaking about the 2021 (introduced in 2013) SPIS, and not the 2007 SPIS or the 2010 SPIS. 

Certainly, if it takes almost 7 years for a case to reach the Supreme Court of Canada, then in 2028, the Court may very well be looking at a 2021 SPIS Form.

Let’s have a look at a real case, namely Krawchuk v. Scherbak

The purchaser bought the property in June 2004. This means that the SPIS 2004 version was used. 

The foundation was unstable and the purchaser sued. The case was tried in the Superior Court of Ontario over a 12 day period in June 2009. That means the actual trial was 5 years after the deal. 

The trial Judgment was appealed to the Ontario Court of Appeal, which heard the case over 2 days in October 2010, and released its decision 6 May 2011, almost 2 full years after the trial. 

The unsuccessful party sought leave to appeal the case to the Supreme Court of Canada. The application was denied on 8 December 2011, which was about 7 ½ years after the real estate deal. 

So, to the extent that the most recent Supreme Court of Canada case dealing with the SPIS is still current, now almost a decade old, that is December of 2011; you have to remember that it was the 2004 SPIS Form that was under discussion.  

Brian Madigan LL.B., Broker

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