By Barry Lebow

 The recent court case Krawchuk vs. Scherbak should make all Realtors stop and think carefully about the use of the disclosure forms that many advocate should be used in every deal. No matter where you are in Canada, if you are selling real estate you must get a good grasp of this recent case.

In a nutshell, the agent was held partially responsible for not verifying the seller’s representations and for not urging the buyers to retain a qualified home inspector. Justice Gloria Epstein stated that using the Seller Property Information Statement (SPIS) in Ontario “seems to present a ground ripe for litigation.”

For more information, search for Ruling highlights danger of disclosure forms by Bob Aaron at www.remonline.com.

In my professional practice today I specialize in two areas of real estate litigation as an expert witness – real estate agency and real estate stigma. In my experience about one in 10 files that I start will eventually get to court. There have been just over 200 cases against real estate professionals over the use of disclosure forms in Canada. Given my own experience of how many cases actually go the distance, I believe that at least 2,000 actions have been commenced against Canadian agents and that probably is conservative.

I have my own observations based on the litigation files I have worked on. Disclosures are absolute. Simple rule: if you know it, you disclose it. If you have to ask if you should disclose, then absolutely you must.

I don’t like the current disclosure forms because they are restrictive and obviously put together by well-meaning committees, but they are limited in their scope. I would never sign the Ontario SPIS form in its present state. There are many questions asked, but not enough and no form could ever encompass all of the potential problems that one could find in a property. Here are the questions I would ask and have signed:

1) Is there anything within your structure that could negatively impact the market value for a buyer?

2) Is there anything upon or beneath your site that could negatively impact the market value for a buyer?

3) Is there anything either in place or pending in your immediate neighbourhood that could negatively impact the market value for a buyer?

4) Have you ever had your property insurance refused, rated or reduced during your ownership?

5) Is there anything notorious about the history of the property that you are aware of that could negatively impact the market value for a buyer?

For example, your client lives in an area and is happy. A buddy who is in the know tips them off that due to heavier air traffic, planes will start using a particular runway on weekends. That will bring plane traffic directly over their home and create a constant disturbance. Before anyone gets wind of this, they list their home with you. Find that on your present disclosure form.

How about a small-town property where a notorious murder took place some years ago?

Your buyer is from a big city, knows nothing of local lore and buys not knowing that the locals consider the house tainted and possibly haunted. Find that on an SPIS form.

Is there anything in your disclosure form about proximity to the clubhouse of a well-known motorcycle gang or maybe a convicted sex offender next door?

I can give many examples of what is missing on the forms, as can you. The fact is, you must disclose what you know but you must also sit down with your sellers and explain the facts to them. You must explain that recent court cases clearly set out that they can be sued and they cannot mask problems. Get them to understand that and get them to outline any problems. Do not forget about the land and out-buildings as well.

Sellers do not have to co-operate and a smart sales rep will insist that the buyer obtains the services of a qualified home inspector. If they decline, get that in writing. Diarize your actions and theirs.

It is apparent from the files crossing my desk, the inquiries I get and from the many Canadian court decisions that Realtors are targets for litigation.

Full disclosure and use of a home inspector may not spare you from being named in a lawsuit but it can protect you from being found guilty and having to pay for a mistake.

For more information, go to www.youtube.com and type in Barry Lebow.

 Barry Lebow is a long-time columnist for REM. He started as a Realtor in 1968. He is an appraiser, arbitrator and educator. He specializes in being an expert witness in stigma and agency matters but is most active as founder & CEO of the Accredited Senior Agent professional designation program for Realtors that now has 800 members and continues to grow. A long-time writer, author and speaker Barry is considered one of Canada’s most dynamic real estate facilitators. 416-784-9806 or email  [email protected].