Undisclosed Furnace Rental


Just had a conversation with the Listing agent. The property closed, and then it turns out that the furnace and air conditioner are leased.

Wouldn’t the buyer’s lawyer check this out on title search etc. The Listing agent said sellers didn’t tell her it was leased. Who is at fault?


The Listing agent is supposed to ask the question. This is a material fact and under the Code of Ethics, the Listing agent is to investigate, determine and verify the material facts.

If the Seller says “no”, that response should be recorded.

If the Seller says that they are “not sure”, then it’s just a matter of looking at the energy bill, in most cases.

As for the lawyer, there are two types of registration:

1) title, which would include a mortgage relating to the price of the furnace, but that’s expensive and may add 15% overall to the price, and

2) registrations under the Personal Property Security Act (PPSA).

The mortgage will show up. The PPSA search is not done. It affects the Seller but not the Buyer.

So, it’s not really clear. It’s unlikely that the lawyer missed it, it’s not generally a matter that they would address. The Listing agent may have missed it, so there’s some liability there. The Seller should have known, so there’s also some liability there as well.. Contractually, the Seller is obligated. If the Seller claimed over as against the Listing agent, that could easily be 50% liability. If it were very obvious, then that might reach 100%.

Brian Madigan LL.B. Broker


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