Seller’s Disclosure: the Rules

Seller’s Disclosure: the Rules



By Brian Madigan LL.B.


Real estate professionals are obligated to conduct their own due diligence when taking a listing. That is part of their “professional responsibility”.

They owe that obligation to their clients, themselves and the public.

Here is an excerpt from the RECORD a publication of the Real Estate Council of Ontario (RECO), the governing body, dealing with sellers and taking a listing , made in its Fall 2011 issue:


“Working with sellers


When acting as a listing representative it is possible that the material facts may already be known by the client/ seller, but the obligation to determine and disclose still exists and is relevant because the seller may not appreciate the potential impact of the material facts.


For virtually all material facts, the “reasonable steps” required for determining those facts will go beyond simply accepting the seller’s verbal representations. Some research and supporting documentation will be necessary.


In addition, the “fairness and honesty” provisions of the Code of Ethics oblige a seller’s representative to disclose known material facts to a buyer’s representative.”


Comment


The seller may not appreciate the potential impact. That means the disclosure, or failure to disclose or even the concealment or deceptive representation that may go along with that.


Honesty is the best policy, but some sellers unfortunately will often try to trade-in a little honesty for a higher sale price.

The role of the listing agent is to address that matter and have a full and frank discussion.


Agency is one matter. That means acting in the best interests of the client. But, joining in any arrangement for active concealment or misrepresentation is not allowed. The real estate agent is a professional and must adhere to the rules of their profession. The Code of Ethics applies and prevails over any allegiance one might have to the seller. The truth must be told!


If the seller chooses not to reveal certain facts, the real estate professional must determine whether those facts are material. If they are, then the professional is under an obligation to disclose them. But, not the seller. So, the seller may choose to go it alone. Sell as a private sale. Follow the “wild west” approach for “FSBO’s” and remain silent.


When it comes to sellers, while they may in certain cases have the right to remain silent, silence is not always golden. Silence drives the price down. Just ask any “power of sale” vendor. They are sophisticated, and they have chosen to offer the minimum in terms of information. That translates into the price. No information, and everyone wants a discount.

A real estate professional may have to disclose. The reason is simple: the Code of Ethics. The result then is clear:


1) accept the listing, and agree to make the disclosure,


2) reject the listing.


It is important to note that just acceptance of the seller’s comments is not enough. Questions must be asked, and satisfactory answers must be given. Then, at a certain point, the “professional” will conclude that they have enough information. But, until then, the investigative inquiry must continue.

It is no longer sufficient to say: “the vendor didn’t know”. That may be fine, but what’s the “professional answer”.



Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888

http://www.ontariorealestatesource.com/

Restrictive Covenants on Title ~ Shed in Cottage Country

(Ontario Real Estate Source)

By Brian Madigan LL.B.

Question:

I am confused when it comes to what represents a valid title objection for the buyer to terminate an agreement.

In the case of a cottage property which has a shed built at a distance of 70 feet from the shoreline but the buyer finds out later when his lawyer is doing the title search that there is a restrictive covenant on the property that prohibits the construction of any buildings within 100 feet of the shore line.

Because this restrictive covenant is not being complied with, the buyer has in this case a valid objection to title and may terminate the agreement.

Answer:

The first question here is to determine whether or not it is material. The next question, assuming that it is material, is to determine if there are any remedies. The seller has the right to offer remedies first. Assuming none are acceptable, then the agreement can be declared to be at an end.

Question:

But what about if there was no shed? Would the buyer have to purchase a property if he/she finds out later from the lawyer that there is such a restrictive covenant?

Answer:

Please read the standard form title clause. It says the buyer agrees to accept restrictive covenants that are being complied with. That means “no breaches”. No shed, of course, means “no breach”. Without saying anything else, this buyer will have to accept the title, even if it comes as a surprise.

Remember, that you can change anything you want, so change this clause so that the buyer at least gets the opportunity to decide whether or not the restrictive covenant is acceptable.

Question:

Also what about if you sign an agreement of purchase and sale as a buyer and you find out later from your lawyer that there is a right of way (or any other important restriction on title which was not disclosed on MLS).

Answer:

This sort of matter shows in the public record. Search it first so that
there are no surprises. If you don’t want to pay for the search ahead of time, then change the agreement, because you are otherwise stuck if you use the standard wording.

When the buyer finds out from his lawyer, he will be annoyed. Then, when the lawyer says the he’s stuck with it because that’s the way you worded the Offer, he won’t be too pleased with you.

Question:

Do you have to buy or would this be a valid objection to terminate the
agreement?

Answer:

As indicated, you are stuck with this. Change the Offer. Not everything is on the MLS.


Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com

Buying Life Insurance from Banks or Refreshment Counters

(Ontario Real Estate Source)



By Brian Madigan LL.B.

Who would ever buy life insurance from a bank? That would be rather unusual.

But, it actually happens quite often. Banks offer life insurance to match the outstanding debt on a mortgage or personal loan. But, it’s not like buying life insurance generally.

The bank’s representative is not qualified or licensed to sell life insurance. That doesn’t mean that they are not trying to get you to buy it. Frequently, they make a commission or bonus based upon your purchase.

So, let’s say you buy it. That means you get to pay premiums until you die. So far, so good. You “qualified” to pay the premiums. But, now you’re dead, does your beneficiary get any money. Now, that’s a totally different question. This would be a good time for the bank to start the underwriting process to see if you are insurable.

That process should have been undertaken right at the outset. The underwriting process should begin at once as it does with most insurers. If there is going to be a potential problem, then the insurer AND THE INSURED both need to know about it from the outset. If there is a slight medical problem, then that issue can be identified and a higher premium assessed.

In this way, both parties are protected. The insurer receives the higher premium appropriate to the increased risk, and the insured knows absolutely that he has life insurance coverage, and can plan his affairs accordingly.

The arrangement is fair to both parties.

Not so with the banks! They just collect premiums and then deny coverage when it is too late. Great scheme!

There really should be a law preventing unlicensed people from selling insurance.

So, the moral of the story is: don’t buy life insurance from a bank. And also, just in case you’re thinking about it: don’t buy life insurance from the people behind the refreshment stand at the movies.

I was going to say that “you’ll live to regret it”, but what I really mean is “your beneficiaries will live to regret it.”


Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com

Seller Must Disclose Refundable Tax Grants and Concessions

(Ontario Real Estate Source)

By Brian Madigan LL.B.


SPIS ~ Bond and Richardson

This is a case in the province of New Brunswick involving the use of the Property Condition Statement and the liability of the agent who assisted the vendor in the completion of the document.

The case is interesting from a procedural perspective. Mr. Bond purchased a property which was subject to certain deferred taxes under the Farm Lands identification Program (FLIP). If Mr. Bond changed the use of the property these deferred taxes would become payable.

So, he sued his own lawyer Ms. Richardson for negligence. His lawyer then sued the vendor for improperly completing the Property Condition Statement. The vendor then sued his own agent for improper advice concerning the completion of the document. All matters were heard in one proceeding.

The purchaser grew up on the property which is the subject of the sale. His family sold the property in 1975 and he saw it advertised in 2003. He contacted the agent, Paul Langlais who agreed to act in a dual agency capacity for he and the vendors, Mr. and Mrs. Kerr.

The FLIP program is designed to keep property as farming lands. If the use changes, the owner is responsible for the current taxes and 15 years of deferred taxes. Mr. Bond wishes to use some of the lands for a commercial auction which is his business. This change in use would trigger 15 years of back taxes. In the interim, Mr. Bond leased out the land for farming.

Liability of the Purchaser's solititor

The Court concluded that the purchaser's solicitor had failed to properly check the taxes prior to closing and this constituted negligence. Mr. Bond has suffered damages as a result of that negligence in that he is restricted in the use he can make of his property without incurring a cost and, by her failure to advise him of the deferred taxes, Ms. Richardson deprived him of the opportunity to reduce, eliminate or even negotiate those costs prior to closing.

Liability of the Vendors

There is also the matter of the vendor's liability, since the purchaser's solicitor claimed over as against them.

James Kerr, the vendor testified that he and his wife lived on the property for 15 years. It was registered in the FLIP when they bought it in 1988 and it was still in the program when they sold it in 2003. He regarded it as a tax break. He testified that all he knew about the program was that it resulted in lower taxes for him and that he was not aware that he would have to pay taxes back if the use of the property changed. He further testified that at the time of the sale to Mr. Bond he was not aware that Mr. Bond may have to pay the deferred taxes.

As part of the agreement, the vendors agreed to sign a Property Condition Statement.

In the first section of the Property Condition Statement, which deals with general information about the property, the vendors answered "no" to the following two questions:

4. Are you aware of or have you been charged any local improvement levies/charges?

5. Have you received any other notice or claim affecting the property from any person or public body?

The trial Judge said " the purpose of that Statement is disclosure. If they didn't have a duty to answer the questions both honestly and accurately that purpose would be defeated and the Statement would be meaningless."

And, the Judge made the following comment:

"It is clear......, James and Carole Kerr, made misrepresentations to Mr. Bond when they completed the Property Condition Statement. Mr. Kerr was aware of the FLIP taxes and while he regarded them as a benefit as opposed to an encumbrance, that did not excuse him from disclosing their existence, particularly when he answered the questions on the Property Condition Statement about whether or not he had received any notices from a public body affecting the property and whether or not the property was under the jurisdiction of any Conservation Authority. Both of those answers were clearly wrong and Mr. Kerr knew or ought to have known they were wrong since he knew from the time they bought the property that it was registered in the FLIP and he executed a document in 1997 in which he opted to continue to have the property registered in the FLIP."

The trial Judge determined that there was no intention to deceive it was an oversight. So, even though there was no finding of fraud, there was still a negligent statement. This statement met the 5 part test set out by the Supreme Court of Canada in Queen and Cognos to establish liability.

The Judge also commented that there was a special relationship between the parties, that is, they were negotiating an agreement, and that gave rise to a positive duty to provide honest and accurate answers:

"The representor's belief in the truth of his or her representations is irrelevant to the standard of care."

On the issue of the completion of the PCS, the Judge observed the following:

"In my view, if Mr. Kerr, in completing the Property Condition Statement, had given some thought to those questions he answered incorrectly, it is more likely than not that he would have realized that the FLIP should be disclosed in answering them.

I find that he did not exercise the care that an objective, reasonable person would have exercised in order to ensure the answers he gave were accurate and he was therefore negligent.

Mrs. Kerr was also negligent because she merely relied on the answers given by Mr. Kerr in signing the statement and made no effort on her own to ensure that the answers were accurate."

Liability of the Real Estate Agent

Paul Langlais had only been an agent for 2 years when he came across this situation. He was unfamiliar with farm properties, and although he obtained a tax statement referring to the FLIP, he knew nothing of the program or its deferred tax provisions.

The Court concluded:

· By failing to make himself and his clients aware of this essential and pertinent fact in a timely manner I find that Mr. Langlais failed to write the agreement in compliance with Article 6 of the Standards as it is not clear and understandable because it does not set out whose obligation it is to pay the deferred taxes.

· It follows, and I find, that Mr. Langlais failed to comply with the standard of care required of a realtor as set out in the Canadian Real Estate Association's Standards of Business Practice and thereby breached the duty he owed to Mr. Bond.

· I further find that Mr. Bond has sustained damages as a result of that breach. It follows, and I find, that Mr. Langlais was negligent.


Accordingly, the Court awarded a judgment in favour of the full amount of the deferred taxes to the purchaser. On the third party claim, the purchaser's solicitor was entitled to claim two thirds from the vendors and the real estate agent, the result being that the solicitor, the vendors and the vendors' agent each bore one third of the loss.

COMMENT:

This case again stresses the importance of the PCS. Be careful, when you are providing responses. If you are a realtor, you must counsel your client in terms of its execution. And, the mere fact the purchaser's lawyer made a mistake was not enough to relieve the vendors or the real estate agent from liability.


Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com

Seller Property Information Statement ~ Boychuk and Bulter

(Ontario Real Estate Source)


By Brian Madigan LL.B.


SPIS ~ Boychuk and Butler

This is another case involving the improper completion of a Property Condition Disclosure Statement and the remedies that are available afterwards. This document is similar to the Seller Property Information Statement used in Ontario.

This case was determined in the Small Claims Court of Nova Scotia February 2007.

The Boychuks entered into an agreement of purchase and sale to acquire a residence owned and occupied by the Butlers in Dartmouth. It should be noted that Mrs. Butler was a licensed real estate agent and acted for herself and her husband in connection with the sale.

The agreement contained the following provision:

"3(b) This agreement is subject to the Seller providing to the Buyer within 24 hours of the acceptance of this offer, a current Property Condition Disclosure Statement, and that statement meeting with the Buyer's satisfaction. The Buyer shall be deemed to be satisfied with the statement unless the Seller or the Seller's agent is notified to the contrary, in writing, on or before (date) Jan 30/06. The Seller warrants it to be complete and current, to the best of their knowledge, as of the date of acceptance of this agreement, and further agrees to advise the Buyer of any changes that occur in the condition of the property prior to the closing date. If notice to the contrary is received, then either party shall be at liberty to terminate this contract. Once received and accepted, the Property Condition Disclosure statement shall form part of this Agreement of Purchase and Sale."

A Property Condition Disclosure Statement dated January 8, 2006, was completed by the Sellers and was provided to the Buyers as required under the terms of the agreement.

The home had been purchased by the Sellers in July 2002. In 2003, they experienced dampness in their yard. They contacted Ralph Crowell, who is a local installer of septic fields and septic tanks. Subsequently, they contacted two other contractors. Remedial work to the septic system was undertaken in both 2003 and 2005.

The agreement and closing took place during the winter conditions of 2006 (30 March), so the septic system could not be properly inspected at that time. By the summer of 2006, a contractor reported that there was a complete system failure and the septic system required replacement.

The Court looked at the issue of negligent mispresentation. There is a five part test before a claimant will be successful:

(1) there must be a duty of care based on a "special relationship"
between the representor and the representee;

(2) the representation in question must be untrue, inaccurate, or misleading;

(3) the representor must have acted negligently in making said misrepresentations;

(4) the representee must have relied, in a reasonable manner, on said negligent misrepresentation; and

(5) the reliance must have been detrimental to the representee in the sense that damages resulted.

There is a review and analysis of the facts and the law in the Judgment:

"(76) According to paragraph 3(b) of the Agreement in this case, the Property Condition Disclosure Statement forms part of same once received and accepted.

(77) Applying the five part test .... I find firstly that there is a duty of care based upon the relationship between the parties.

(78) The next issue is whether the Sellers made to the Buyers a representation that is untrue, inaccurate or misleading.

(79) The Sellers rely upon the fact that the Property Disclosure Statement contains additional comments at paragraph 11 as previously noted. In fact paragraph 11 does contain a statement that french drains had been installed around the rear of the property in the summer of 2004 and spring of 2005.

(80) From their perspective, however, the Buyers submit that the provisions of the Property Condition Disclosure Statement relating to the septic disposal system note no previous problems with the existing system or upgrades having been carried out to the system in the last five years. In addition, paragraph 5 of Addendum Form 101, Schedule 4, contains a specific statement that the Seller warrants "to the best of their knowledge" that the septic disposal system is in good working order and has not presented any problems during their ownership and this warranty explicitly is stated to survive the closing.

(81) On the whole, I find the statements in the Property Condition Disclosure Statement to be misleading to potential purchasers. Anne Butler is a licensed Real Estate Agent. Despite her lack of personal experience with septic waste disposal systems, she clearly was aware that the water and drainage problems they were having were related to the septic field.... The drainage repairs were undertaken by them as a means of attempting to fix the issues they were having with their septic system. No explanation was given concerning why the information about the french drains was noted under additional comments in the area of "Structural" in the Property Condition Disclosure Statement. Paragraph 6A. and B. specifically refer to structural problems, unrepaired damage or leakage in the foundation, roof or walls and make no reference to problems with the septic system.


(82) The third step of the test is to determine whether the representor acted negligently in making the representation. I do conclude that the Vendors were negligent in making such representations in the manner in which they were made. It would be expected of a Vendor in this case, and even more so where Ms. Butler is a licensed Real Estate Agent, to note the drainage repairs in the area in the Property Condition Disclosure Statement concerning "Sewage Disposal" which would alert potential purchasers to possible problems with the system, such that they would inquire further. To include this information in the area of "Structural" would imply to a potential purchaser that the repairs were undertaken to deal with a problem of leakage in the foundation, roof or walls of the house. They would not be alerted to the possible problems with the septic system which the Sellers in this case were fully aware of.

(83) I find in this case that the Sellers were at the very least careless when preparing the Property Condition Disclosure Statement by failing to connect the drainage repairs to possible problems with the septic system.

(84) ....... to place this information under the "Structural" section of the Property Condition Disclosure Statement could easily mislead a potential purchaser into believing that the aforesaid repairs concerned structural issues with the foundation, roof or walls. This was particularly important in this case as the Sellers had in fact undertaken major structural repairs, including replacement of leaking windows before listing the property for sale.

(85) In reaching my conclusions on this point, I have also taken into consideration that a failure to provide information may constitute a misrepresentation as much as a positive misstatement.

(86) The fourth step of the test is whether the Buyers in this case relied in a reasonable manner upon the negligent misrepresentation. Once again, I have no hesitation in finding that this is the case. A buyer would reasonably conclude from the way that the Property Condition Disclosure Statement was prepared that the installation of the french drains was to deal with structural issues not possible problems with the sewage disposal or septic system.

(87) Step five of the test is clearly proven as the Buyers discovered that the system had failed entirely shortly after the snow melted from the ground."

The trial Judge allowed the purchasers' claim for the cost of the replacement of the septic system, but reduced the amount of the damages by 50% by reason of betterment.

COMMENT:

This case again points out the difficulties with the completion of the form. Here, one of the vendors was a real estate agent and was therefore held to a higher standard than might otherwise have been the case. While there was no real attempt to deceive, the document was filled out carelessly.

It should be observed that in this particular case the Property Condition Disclosure Statement (PCDS) was elevated to form part of the contractual terms of the agreement itself.

The test of correctness of the answers was measured from the purchasers' perspective. What would a normal purchaser think, given the responses. The Court did not consider whether the answers might be good responses from a technical point of view on the part of the vendors.

It should also be noted that the vendor, being a real estate agent was held to a higher standard.

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com

Seller Property Information Statement (SPIS) ~ Sask and Brooke

(Ontario Real Estate Source)

By Brian Madigan LL.B.

This was a case heard in the Supreme Court of British Columbia and it involved the Property Condition Disclosure Statement, which is similar to Ontario’s Seller Property Information Statement.

Briefly, the plaintiff as purchaser acquired a condominium unit for $133,000 but the unit leaked, as did others in the complex. Obviously, this problem had become well known in Vancouver. No one wants to buy, particularly with so many others available. The value had dropped to $22,000 and the purchaser, Sask faces a special assessment of $60,000 for her share of common ownership repairs.

In a nutshell, this is a mess!

Naturally, the condominium owners are suing the builder but that will take time. In this case, Sask claims that the vendors made false or negligent representations in the Property Condition Disclosure Statement (PCDS).

The trial Judge expressed the issues in the case as the following questions:

1. Did Michael Brooke and Ursula Wenzel misrepresent the condition of their condominium at the time of sale?

2. Was Shirley Sask induced to purchase the condominium by those misrepresentations?

3. What damages has Shirley Sask suffered?

The agreement of purchase and sale included several conditions including financing, perusal of the strata council minutes and the sellers' Property Condition Disclosure Statement.

In many cases, the PCDS is made to form part of the agreement by attching it to the agreement as a Schedule or Addendum. Here, it was simply a condition.

The sellers answered "No" to the following questions:

H. Are you aware of any structural problems with the premises or other buildings on the property?

K. Are you aware of any damage due to wind, fire, water?

M. Are you aware of any roof leakage or unrepaired damage?

The preamble to the document is worth noting, according to the trial Judge:

"THE SELLERS ARE RESPONSIBLE FOR THE ACCURACY OF THE ANSWERS ON THIS DISCLOSURE STATEMENT AND WHERE UNCERTAIN SHOULD REPLY "DO NOT KNOW". THIS DISCLOSURE STATEMENT CONSTITUTES A REPRESENTATION UNDER ANY CONTRACT OF PURCHASE AND SALE IF SO AGREED IN WRITING BY THE SELLERS AND BUYERS."

In addition, there is a statement that appears in the document above the seller's signature:

"The sellers state that the above information is true, based on the sellers' current actual knowledge as of the above date. Any important changes to this information made known to the sellers will be disclosed by sellers to buyers prior to closing. The sellers acknowledge receipt of a copy of this disclosure statement and agree that a copy may be given to prospective buyers."

Further, just above the buyers' signature on the same document is the following disclaimer:

"The buyers acknowledge that they have received and read a signed copy of this disclosure statement from the sellers or the sellers' agent on the 24th day of February, 1997. The prudent buyers will use this disclosure statement as the starting point for their own inquiries. The buyers are urged to carefully inspect the property and, if desired, to have the property inspected by an inspection service of their choice."

The Judge in analysing this case said that "The more important questions concern the extent to which the sellers represented the condition of the property and the extent to which Shirley Sask relied upon their representations.

A copy of the disclosure statement, dated February 17, 1997, was given to Shirley Sask before she signed the contract of purchase and sale on February 24th, and the sale was subject to Sask "perusing & approving" the strata council's minutes, bylaws, and financial statements.

Sask has not proved reliance upon the disclosure statement in isolation from the strata council minutes which were provided to her at the time of sale. Sask has failed to prove that the sellers intended to mislead her in any way, particularly when the disclosure statement is read in conjunction with the strata council minutes.

It should be noted that the strata council minutes detailed the problems and expenditures of the condominium in respect to the premises.

The tort of negligent misrepresentation is now an established principle of Canadian law: Queen v. Cognos Inc. (1993), 99 D.L.R.(4th) 626 (S.C.C.). Five requirements must be met:

(1) there must be a duty of care based on a "special relationship" between the representor and the representee;

(2) the representation in question must be untrue, inaccurate, or misleading;

(3) the representor must have acted negligently in making said misrepresentation;

(4) the representee must have relied, in a reasonable manner, on the said negligent misrepresentation;

(5) the reliance must have been detrimental to the representee in the sense that damages resulted.

In this case, the first three requirements were met including negligence on the part of the sellers in making the statements.

The trial Judge stated:

"However, whether or not the sellers were negligent in purporting to confine their representations to the condition of their own unit is not, in my view, determinative of this claim. In light of their concurrent provision of minutes from strata council meetings where leakage problems were discussed, the sellers' disclosure obligations were fulfilled in a manner that should have alerted a prudent purchaser to the need to make further inquiries."

And further commented:

"In my view, the fourth requirement of the mentioned test in Queen v. Cognos Inc. has not been met, as I cannot conclude that Shirley Sask acted in a reasonable manner by relying upon the property condition disclosure statement without reference to the information provided in the strata council minutes. The sale was subject to a condition precedent that contemplated perusal and approval of the strata council's minutes, bylaws and financial statements, and in complying with that condition the sellers were effectively providing Shirley Sask with the history of water leakage problems in the complex. In light of her opportunity to review those documents, Ms. Sask had the right to refuse to close the transaction as a consequence of that information, but chose not to do so.

On the whole of the evidence, it has not been proven that the sellers misrepresented the condition of unit #206, and the claim is dismissed".

COMMENT:

So, this is an interesting case. The sellers made a misrepresentation. That misrepresentation was made negligently, but the Judge concluded that all in all, the purchaser did not rely on that the document that contained the errors.

There was ample opportunity for the purchaser to find out the correct facts from the strata council minutes. As a result, there was no liability on the part of the vendors. However, rather than being saved by the signing of the Property Condition Disclosure Statement, they were in fact saved because there was a condition in the agreement permitting the purchaser to peruse the strata council minutes, and the correct information could be found there. The mere fact that the Purchaser failed to look, is her fault, and does not establish liability on the part of the vendors.

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com

Negligence Act ~ Recovery

(Ontario Real Estate Source)

By Brian Madigan LL.B.

In our example, A sustained injuries and damages due to the negligence of both B and C. But, since it was actually just B who came into direct contact with A, then A might decide that just B will be sued.

Let's look at section 2:

Recovery as between tortfeasors

2. A tortfeasor may recover contribution or indemnity from any other tortfeasor who is, or would if sued have been, liable in respect of the damage to any person suffering damage as a result of a tort by settling with the person suffering such damage, and thereafter commencing or continuing action against such other tortfeasor, in which event the tortfeasor settling the damage shall satisfy the court that the amount of the settlement was reasonable, and in the event that the court finds the amount of the settlement was excessive it may fix the amount at which the claim should have been settled.

So, B gets sued by A and is liable for a judgment in favour of A in the amount of $50,000. B can still sue C and claim contribution and indemnity. There are two choices 1) add C to the action by third party proceedings or 2) wait until the judgment is rendered by the court.

It is also contemplated that the first action will be settled rather than tried. In this case, B still has the same rights of recovery. However, this time B needs to prove that the settlement figure, (whatever it was) was reasonable in the circumstances.

In this situation B might reasonably argue that a $40,000 settlement was reasonable since it represented a savings, and that a $60,000 settlement might also be reasonable since it saved the costs of trial.

Should the settlement figure have been $100,000, which a court might conclude was well in excess of a reasonable amount, the court could fix a lower amount.

Again, the right to recover is limited to the apportionment determined by the court, which in the case of settlement shall be determined at the second trial (B vs. C) or in the third party proceedings (B vs. C).

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com

Negligence Act ~ Joint Tortfeasors' Liability

(Ontario Real Estate Source)

By Brian Madigan LL.B.

The Negligence Act sets out dealing with the matter of the liability between joint tortfeasors.

Here is the section 1:

Extent of liability, remedy over

1. Where damages have been caused or contributed to by the fault or neglect of two or more persons, the court shall determine the degree in which each of such persons is at fault or negligent, and, where two or more persons are found at fault or negligent, they are jointly and severally liable to the person suffering loss or damage for such fault or negligence, but as between themselves, in the absence of any contract express or implied, each is liable to make contribution and indemnify each other in the degree in which they are respectively found to be at fault or negligent.

So, what does that mean?

Let's assume that three cars. A, B and C are involved in an accident. They are following one another. The first vehicle A comes to a full stop. However, it's icy and the second car B fails to stop and collides with the rear of vehicle A. The third car is travelling far to fast and crashes into the rear of vehicle B, forcing it once again into vehicle A.

Let's assume that a court determined that the total damages sustained amounted to $50,000.

This particular section of the Negligence Act provides as follows:

•· The Court decides on an apportionment of liability between B and C for A's damages.

•· The Court might determine that B is 25% at fault and C is 75% at fault.

•· Both B and C are responsible or liable to A for $50,000.

•· As between themselves, B will be responsible for 25% of $50,000, or $12,500.

•· As between themselves, C will be responsible for 75% of $50,000, or $37,500.

•· The liability to A, is joint and several, that means they both together owe A $50,000 and each of B and C owe A, $50,000 individually.

•· Should either B or C pay A, the full $50,000, then they are entitled to contribution and indemnity from the other, for their share. B can get 75% from C, and C can get 25% from B.

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com