Disclosure Statement Not Part of Agreement ~ Buyer Left without Remedy
By Brian Madigan LL.B.
The Csada and Williams lawsuit is a case which involves the use of the Property Condition Statement in the Province of Saskatchewan pursuant to the terms of a residential agreement of purchase and sale.
Mr. and Mrs. Csada submitted an Offer to purchase certain residential premises owned by Mr. and Mrs. Williams in the City of Regina. The case was heard in the Provincial Small Claims Court in 2006.
The offer was subject to the following conditions:
1) gasoline location (no problems)
2) furnace inspection (favourable) at purchasers expense
3) property disclosure statement.
The Williams completed a Property Condition Disclosure Statement in which they said, in part, that they were not aware of any damage due to water. Then, the parties signed an amendment to the contract in which they agreed that the conditions quoted above are removed. In particular, the amendment stated:
“(3) Property condition statement (PCDS) is removed.”
There are no warranties or guarantees stating that the house is free from any of the defects subsequently complained of by the Csadas. In short, based on those documents, the Csadas have contracted to buy the house on an “as is” basis.
So, the Court was left with the task of interpreting the PCS as it related to the agreement. Initially, there was a contract to sign a PCS. The PCS was then, signed and delivered to the Csadas. Subsequently, the parties signed an amendment to the agreement thereby deleting that provision.
The Court concluded:
“The property disclosure statement has no effect on the contract, and the parties are left with what they agreed to …. That agreement provides the Csadas with no remedy against the Williams for the expenses in relation to which they bring this action.”
Recognizing that the decision might seem somewhat harsh the trial Judge offered the following advice:
“Home buyers, particularly first time home buyers,
1) frequently fall into the trap of spending too little time inspecting the home before making the decision to purchase,
2) rush into the purchase at a time when caution is of the utmost importance,
3) assume that mortgage appraisers will do a pre-purchase inspection when in fact they do not, and
4) enter into a contract containing provisions such as in clause 11 of this contract in which all of the risk shifts to them.
It is further unfortunate that the Csadas did not receive and follow advice to employ pre-purchase inspection experts, or require as a term of the contract guarantees as to conditions.”
COMMENT:
Here the PCS was not part of the agreement. An amendment deleted it from the contract terms. Independently, other Courts have viewed the representations from tort principles and established liability. In this case, the strict rules of contract were applied.
It is obvious that in this case, the execution of the amendment deleting the conditions was in error, if the purchasers wished to have the PCS as part of the contract.
It might also be noted that this case was tried in Small Claims Court, and consequently larger liability issues were likely not raised due to the lack of time and resources. If the damages were higher, and the matter tried in a higher Court, it is much more likely that the plaintiff would have been successful.
Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Royal LePage Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com
