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Vendor required to provide full and complete information

This case involves a couple who bought a house in london, ontario in 1981. In 2004 they discovered for the first time water damage problems in several locations throughout their house.

It was determined that the water damage was caused by “ice-damming”, a result of especially bad snow and ice conditions throughout southwestern ontario during the winter of 2003-04. The melt water penetrates the roof and can cause serious water damage inside the house.

The owners decided to list their house for sale in the late spring of 2004 with a listing price of $495,000. As part of the listing arrangement, the vendors signed a “seller property information statement” (spis) which apparently is a routine practice of the london real estate board but is not required.

the spis stated there were no water problems. The purchasers offered to purchase the property for $485,000 in july 2004. The spis was appended as part of the agreement of purchase and sale.

When the purchasers discovered that there was a water problem they withdrew from the deal. The vendors eventually sold the property to someone else for the reduced price of $380,000 and sued the purchasers for the difference. The purchasers counter-claimed on the basis that the vendors breached their contractual obligations to provide full and complete information about the true condition of the premises under sale. Justice g.p. killeen concluded that “the plaintiffs deliberately withheld information from the purchasers in the answers to questions.... [in] the spis, information that was strongly relevant to the purchasers in deciding whether to sign the agreement”. His honour further ruled that “since the spis form was incorporated in the agreement, the non-disclosure was tantamount to false representations as to the condition of the home and justifies rescission.” the vendors’ action for damages was dismissed and the agreement was declared rescinded. Vendors beware.

Kaufmann v. Gibson [2007] o.j. no. 2711