SPIS Disclosure Problem (Ethical Considerations)

Question:

If your client has filed out an SPIS form but has requested you do not show it, however, on the form they did note the basement leaks. You then show the property to a Customer and they ask you if the basement leaks, what then?

Answer:

Once you know about the basement leak, you have a problem. You are obligated to follow your Client’s instructions. So, you will have to know one way or the other whether you can reveal this information.

If they say “yes”, then go ahead and respond truthfully with a factual response.

If they refuse to provide permission, then, with respect to the public and buyers represented by other agents etc. you are permitted to respond “vaguely”, like: “ I am not authorized to provide a response to your question”. It’s obviously a “non-answer”. It is truthful. What you can’t do is lie, even if the Seller requests that you do so.

Your question really related to having a Customer. That’s somewhat more challenging because you have an obligation to investigate, determine and verify the material facts under the Code of Ethics for Clients, and disclose what you know (and you do know this) or what you ought to know for Customers.

Now, you have a dilemma. The basement leak is a fact. You know it. You have to tell your Customer. The Seller has told you not to tell.

The answer is actually quite straightforward:

  1. Convince the Seller to permit you to disclose, or
  2. Walk away from the Listing.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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