When shopping for Toronto real estate, it can be easy to get caught up fawning over the marble countertops and the gleaming hardwood floors, but it’s important to also consider the home’s bones – things like the foundation, wiring, plumbing and the roof. These aspects of your prospective home might not be as glamorous as the remodeled master bedroom or spa-like bathroom, but they will define the quality of life you experience while living day to day, and it’s important that you gather as much information about them as possible.
There are two primary ways to gather important information about the state of repair of these key aspects of your home. The first, and the most well-known, way is to get a home inspection. A home inspector will do a thorough walk-through of your home and visually inspect as much of these systems as they can. They’ll then provide you with a written report (usually including photos) of any potential issues.
Related Read: New Home Inspector Regulations Coming to Ontario
What an Inspector Can’t See
Unfortunately, many potential problems that may be lurking in your prospective home will not be identifiable by the home inspector. That’s because the home inspector doesn’t poke holes in the walls, so they can’t tell if there is knob and tube wiring in the attic, if the basement floods every spring, or if the roof has a history of ice damming.
Buyers Can Ask for More Disclosure
To uncover potential issues like these, you can request that the seller fill out a Seller Property Information Statement (SPIS). A SPIS is an optional form in Ontario that a buyer can request from a seller, and it requires the seller to list all of the information they know about the property including any renovations or repairs performed and any defects.
For example, if the home has a history of ice dams forming on the roof which led to leaks and repairs, the seller would be required to disclose that information.
A SPIS can be a useful tool to help you determine if there are any defects in the home that your home inspector couldn’t find. You can then use the information contained within a SPIS form to negotiate a lower selling price or require fixes to the property before closing.
A SPIS isn’t a Substitute for an Inspection
While there is no doubt that the SPIS is a useful document to potential buyers, it has some limitations. For example, the SPIS only requires the seller to disclose defects they are aware of. So if you are purchasing a property from a seller that has only lived there for a few years, they might not know about defects that could come up later. If the seller doesn’t know about a defect, they can’t disclose it. Secondly, a SPIS is not a substitute for a home inspection by a qualified professional. Even if you are purchasing a Toronto townhouse instead of a fully detached home, it is always a good idea to get a certified home inspector to assess the property you are considering purchasing.
A SPIS Can Legally Bind the Seller
So what happens if the seller does not disclose information on the SPIS form or does not adequately do repairs agreed upon within the SPIS? In most cases, the law is on the buyer’s side. An Ontario Court of Appeals decision in 2011 held a seller legally responsible for incorrect information contained within the SPIS, either through negligence or deliberately defrauding the buyer. The decision means that if the seller intentionally lies or even simply makes a mistake on the SPIS, the buyer can hold them legally responsible.
An example of fraud on a SPIS form would be if the buyer indicated on the form that there had been no flooding in the home when in reality they knew the home had a history of flooding in the spring, the buyer could hold the seller responsible for damages relating to future home flooding. If the seller simply forgot about the one time the home flooded several years ago, they could still be held legally responsible for damages.
The SPIS can also determine what repairs need the seller needs to do before closing, and the seller can be held responsible for failing to carry out those repairs.
A SPIS is Not Legally Required
The SPIS form can be controversial for buyers and sellers because it is not a legally required form in Ontario. You can ask a seller to complete a SPIS form, but in a hot market, the seller may refuse and simply move on to another buyer who does not require it. From a seller’s perspective, the SPIS is a legally binding form that could leave them vulnerable to potential legal action in the future. In most cases, the state of the residential real estate market will dictate whether a seller is willing to fill out this useful form, but a buyer should always, always ask for it.