SPIS ~ Statement Fails to Disclose Material Easement

 

By Brian Madigan LL.B.




The Macdonald and Robson matter was an application in the Superior Court of Justice of Ontario for an order rescinding an agreement of purchase and sale.

The purchaser Mr. Macdonald had submitted an offer to acquire certain property owned by the vendor Robson. The transaction was to close on 28 April 2008 and the matter proceeded to Court 3 days before closing.

The property comprised 2 acres of rather picturesque property backing onto conservation lands in Flamborough, Ontario.

As it turned out, there was an easement in favour of the Township over one half of one acre or 25% of the property.

The vendor had completed a Seller Property Information Statement (SPIS) indicating:

"in response to a question inquiring whether there were any easements, the answer given was "unknown, on survey".

In another question asking if the survey showed the location of all easements, the response was "yes, written location of sunroom".

A survey was produced ......, but it made no reference to any easements."

The motions Court Judge said:

"There was no suggestion that the vendor's were aware of the existence of the easement or that any misrepresentation was made. Rather, the vendor's argument before me was that the existence of the easement did not materially affect the purchaser's use of the property, principally because there are other areas on the property where Mr. Macdonald would be permitted to build his drive shed and other structures. The respondent relies on the decision of Stefanovska v. Kok reflex, (1990), 73 O.R. (2nd) 368, arguing that Ms. Robson, the vendor can convey substantially what Mr. Macdonald contracted to get.

Justice Forestell in Ridgely v. Nielson, [2007] O.J. No. 1699, noted that there are four factors to be considered in determining whether an easement is material:

1) the location of it;

2) the size of the easement;

3) the point of access; and

4) the owner's enjoyment of the property."

Consequently, the Court determined that the purchaser was entitled to rescind the agreement.

COMMENT:

Although there was a SPIS completed in this case and although it was incorrect, the decision of the motions Court Judge was made on the basis of contract alone.

In all likelihood, should the matter of misrepresentation have been made an issue, then the Court would probably have directed the trial of an issue. The important matter to bear in mind in this case, is the issue of costs. Such a proceeding would have been substantially more costly than an application in motions Court. In this case, the Judge saved both litigants some expense, by disposing of the matter summarily.

Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Royal LePage Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com