A Seller Property Information Statements (SPIS) is a standard form document that was drafted by the Ontario Real Estate Association. It will contain information relating to defects, renovations and other pertinent property information based on the seller’s knowledge and experience.
While seller property information statements (SPIS) are not required by law, there are certain legal implications that investors and real estate agents should be aware of.
Typically, the Seller Property Information Statement demands that a home seller discloses any current issue with the property. Listing agents present the potential sellers with this particular form, but, the sellers quickly realize that it requires them to answer some technical questions that cannot be easily answered by an average homeowner.
In Ontario, this document is usually a three-page questionnaire that contains questions such as:
• Is the wiring aluminum, copper or the conventional knob and tube?
• Does the property in question in line with the zoning requirements?
• Is there any galvanized metal or lead plumbing in the house?
• Are there issues with the heating, plumbing or air conditioning systems?
• Are there any cases of water or moisture problems in the home?
• Does the survey indicate the current location of all structures, easements, renovations, and rights-of-way?
• What is under the flooring?
• Is the house under the jurisdiction of any Conservation Authority?
• Are there any registered easements, encroachments or rights-of-way?
• Do you know of any structural issues, insect damage or non-compliance with the Fire Code of the State of Ontario?
Latent Defect Disclosure
It is imperative to note that a seller must reveal or rather disclose latent defects such as telling if the house is potentially dangerous or unfit for human habitation. To be more precise, a latent defect is a hidden flaw and thus not readily apparent to a potential buyer upon a reasonable inspection and may include, a crumbling or leaky foundation and sealed plumbing or electrical problem. Bearing in mind that latent defects are not visually observable during regular inspections, a seller may not know of their potential existence. This then implies that the seller cannot be held liable for an unknown latent defect. However, it should be noted that if the seller is aware of any latent defect, he/she must inform the buyer of such a defect after the Agreement of Purchase and Sale has been signed but before the closure of the sale. According to the law in Ontario, a seller of a real estate property is not obliged to disclose any hidden defects in a structure unless the defects deem the property unfit for human habitation.
Stigmatized Property Disclosure.
There are no laws in Ontario that demand that the seller must inform the buyer if there has been murder, suicide or even ghosts on the structure. But, Realtors should adhere to the RECO rules and regulations, which require them to disclose all the material facts that may affect the value of the house. This implies that if the agent has such kind of information, he/she must inform the potential buyers.
Marijuana Grow Operations.
According to Ontario law, a homeowner must disclose if the structure was a grow operation when:
• The prospective buyer either expresses a specific issue or asks a particular question.
• There is a real material latent defect that the seller is aware of or ought to have known.
• The Agreement of Sale and Purchase has representations that the structure was never utilized for criminal activity or as a grow op.
• There is some regulatory or statutory requirement that this particular disclosure should be made.
This perhaps explains why in Ontario, signing a disclosure statement such as the SPIS is optional.
In most occasions, the rule is that the buyer alone is solely responsible for examining the quality, suitability as well as the sustainability of the structure and its components before making a purchase. This means that the buyer must conduct a home inspection and ask lots of questions before signing the Agreement of Purchase and Sale.