SPIS - A Potential Landmine In Real Estate Transactions

Back in 1997, the Ontario Real Estate Association introduced the Seller Property information Statement (SPIS). It's a document in which sellers voluntarily disclose information such as defects, past floods, leaks, environmental concerns and other red flags that buyers would rightly want to know before signing on the dotted line. The benefit seems clear. Yet, over the last two decades, this simple form has sparked 94 contentious court cases in Ontario alone - with unknown others settled out of court or unreported altogether.

Why The Controversy?

Sellers are not required by law to complete an SPIS. If a buyer insists on having one as a condition of sale, the seller can choose to provide it or decline and move on in the hopes of finding another, less assiduous interested party. But once a seller does fill out an SPIS, the agent or broker must thereafter, at a minimum, disclose its existence to all potential buyers - although the form itself need not be made available unless the buyer specifically requests it and the seller agrees.

Sellers fill out the form based on their best knowledge, experience - and honesty. Buyers take its contents to be accurate and reliable. But what happens if a nervous buyer backs out and the deal fails to close? Or if issues unknown at the time of signing arise after the buyer takes possession? Court history will tell you: it's a fertile ground for litigation - negligence, fraud, breach of contract, the whole nine yards.

One of the roots of the problem is that the SPIS is a beast of a form to fill - complicated, technical and ambiguous. Any ordinary homeowner would be hard pressed to complete it without the involvement of a lawyer, home inspector and possibly other specialists such as environmental experts.

The Implications

Prudent buyers ask for an SPIS. Yet, sellers are wise to avoid touching this legal hot potato unless absolutely driven by necessity - ideally only after being warned by an ethical broker of the potential legal implications unleashed upon signing.

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