SPIS Statements ~ Warranties or Representations?

If the seller completes a Seller Property Information Statement, just what are the answers: warranties or representations or neither?

Certainly, a warranty is actionable, a representation may or may not be, and if the statement does not fall under either category, then there is likely no liability.

Let’s have a look at the actual SPIS document and see what it says:

ANSWERS MUST BE COMPLETE AND ACCURATE

This statement is designed in part to protect Sellers by establishing that correct information concerning the property is being provided to buyers.

All of the information contained herein is provided by the Seller to the brokerage / broker/ salesperson.

Any person who is in receipt of and utilizes this Statement acknowledges and agrees that the information is being provided for information purposes only and is not a warranty as to the matters recited hereinafter even if attached to an Agreement of Purchase and Sale.

The brokerage / broker / salesperson shall not be held responsible for the accuracy of any information contained herein.

You will notice that very specifically it says

1)     information purposes only,

2)     not a warranty,

3)     even if attached.

So, does that disclaimer mean anything?

In Krawchuk v. Scherbak, the sellers argued on appeal that they could not be held liable since their statements were not warranties.

The Ontario Court of Appeal considered that argument, but quoted another case with approval:

“I agree with Killeen J.’s conclusion in Kaufmann v. Gibson (2007), 59 R.P.R. (4th) 293 (Ont. S.C.),that even though statements made in an SPIS are not warranties, they may still be the basis of liability as representations.  After citing the complete first two paragraphs in the SPIS, Killeen J. said, at para. 100:

As can be seen in the opening words of para. 1, “ANSWERS MUST BE COMPLETE AND ACCURATE”.  While this paragraph goes on to say that the answers do not constitute warranties, there cannot be any doubt that they can have legal consequences as representations, especially if they were read by the purchasers before submitting their offer, as here, and were then incorporated into the terms and conditions of the agreement. [Emphasis added.]”

So, in Ontario, notwithstanding the disclaimer contained in the SPIS document, there are consequences, and there is liability flowing from such statements.

The Court imposed liability based in tort law not contract. As a result, it is wise to have a reasonable understanding of tort law. Operating solely on contract principles is insufficient and places a real estate practitioner at risk.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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