SPIS ~ Lance and Wright

Real Estate Agent’s Liability

This was a case in the Supreme Court of British Columbia in 1997 involving the use of the Property Condition Statement.

Mr. and Mrs. Lance purchased a property from Mr. and Mrs. Wright. Subsequent to the purchase, they claim that the water supply was inadequate and that there were misrepresentations contained in the Property Condition Statement signed by the Wrights.

This was not an actual trial. It was a procedural motion before trial. The trial date was less than one month away.

The purchasers sued both the Wrights and the Wrights’ real estate agent, Miller. Miller took the position that there was no duty owed to the purchasers, and before trial, they accepted that position. The purchasers then sued their own agent McCullough for negligence, having left Miller out of the lawsuit.

As part of the pretrial process was the provision of a report by an independent realtor (retained by the Lances) who had experience and expertise in the use of the PCS form. This report indicated the possibility of negligence on the part of both agents, not one.

So, this time, the Wrights thought they should add their own agent as a third party to the lawsuit, claiming that they were misled in respect to the manner in which the form should be completed. Upon this particular application, the Court concluded that it was too late to add Miller, the trial date was less than one month away. However, if the Wrights were found responsible they could still sue Miller later.

The Property Condition Statement

You should actually know what all the fuss was about.

Here is what the Court recited in reference to the PCS Form:

“[13] The Wrights voluntarily filled out a Property Condition Disclosure Statement. This is a form of written statement in use by realtors who are members of the Vancouver Island Real Estate Board. On that statement sellers are asked to reply in writing to a number of questions relating to the condition of the property put up for sale. They are invited to make a reply by means of initials placed under one of four columns headed “Yes,” “No,” “Do Not Know” and “Does Not Apply.” Mr. Wright completed that statement on behalf of the Wrights.

[14] Question 1D of the statement reads as follows: “Are you aware of any problems re: quantity or quality of well water? (gal. per minute if known – ).” In answer to that question Mr. Wright placed his initials under the column “Do Not Know.” He did not fill in the blank regarding gallons per minute, but wrote instead, “When drilled 4 gallons per minute.” At the bottom of the statement in a section headed “Additional Comments and/or Explanations,” he wrote this: “The supply of well water has been found adequate for our domestic purposes. In past years the well has been pumped dry on two occasions, but recovered readily.”

[15] Despite the invitation which was extended on the reverse of the Property Condition Disclosure Statement to incorporate the Statement as a part of the contract of purchase and sale, the parties did not do so. The effect of the Disclosure Statement when not incorporated is said, on the back of the Statement, to be as follows: “The Disclosure Statement will not form part of the contract of purchase and sale unless so agreed by buyers and sellers.”

[16] Under the column “Do Not Know” certain blocks provided for answers are darkened. The Disclosure Statement does not refer to this darkening. The initials of Mr. Wright in answer to question 1D are placed in a block which is darkened. The opinion of Sylvia Gardner is, in relation to question 1D, that “The Property Condition Disclosure Statement allows for YES, NO and DOES NOT APPLY responses only, with DO NOT KNOW being blacked out.” Ms. Gardner then expresses the opinion “The fact that the seller initialed “DO NOT KNOW,” which response is not allowed on the Property Condition Disclosure Statement regarding any problems re quality or quantity of water, should have been reason enough for the agents involved to have exercised care and looked into this further.” It is this comment which causes the defendants Wright to fear that the plaintiffs may attempt to rely upon that error or deficiency in the Disclosure Statement to claim relief against them arising out of the carelessness of their agent.”

COMMENT

So, if you were Miller, first you were sued, then you were let out of the lawsuit. Then you were sued again, but let out a second time. Then you were told you might be sued later.

From the perspective of the purchaser, the lawsuit was a little cavalier. First they sued Miller with whom they had no contractual relationship whatsoever. I suppose they might rather sue someone else’s agent than their own, however, they were guided by the advice of their own agent.

Then they decided to sue their own agent, which of course they probably should have done in the first place.

The independent realtor pointed the finger at both agents. The PCS Form was not properly completed. My point here is to demonstrate some of the risks to realtors. You could be sued by your own client, the vendor, the purchaser or the other agent. In fact, you could be involved more than once in one lawsuit, and in more than one lawsuit arising out of the same alleged error. Further, you may have given the “right advice” and still have had this same mess.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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