The Beauchamps lived in their London, Ontario home for six years and during that time they renovated the basement which they used as a playroom and as a guest room.
They sold their home in 2007 and their basement flooded one week before the closing of the sale to Adam and Yogi Soboczynski.
The Beauchamps fix the problem and because their basement had never flooded before they decided not to pass this information to the buyers.
Basement floods again
The problem arose a week later when the basement flooded again and it cost the new owners $20,000 to have it fixed.
The matter ended up in court.
The buyers hired an engineer who testified that flooding had probably occurred during the previous seven years, based on his findings.
Who is a more credible witness, the engineer or the sellers’ relatives?
As a defense, the Beauchamps brought some of their relatives to testify. They had stayed in the basement and there was never any indication of water problems. The Beauchamps had filled a Seller Property Information Statement (SPIS) but the form was not attached to the accepted offer.
The judge preferred the evidence of the relatives over the engineers’ report. He agreed the flooding was a one-off incident and did not have to be disclosed to the buyers.
Important lessons for would-be sellers!
• Disclose all problems you know about. If you are not sure, err on the side of disclosure.
• If you as a seller sign a Seller Property Information Statement, to be safe, do not attach it to the agreement of purchase and sale. That way, you will be protected if you made a mistake in completing it.
Lessons for home-buyers
• Do not rely on the SPIS because it is not supposed to be a warranty; it is just to be used for information purposes.
• If something matters, always include it in your Agreement of Purchase and Sale. As a home buyer you should never rely on verbal promises or advertisements.
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