Tuesday, April 15, 2014

Disclosure And You

As the seller of your home you may be asked to sign a Seller Property Information Sheets or SPIS. In some locations they are mandatory, but in Ontario, they are voluntary.  So what is the purpose of a SPIS anyway?

The current law is that a vendor is not under obligation to disclose glaring or apparent defects of quality.  So, if you as the seller of the property are aware of quality issues such as product performance, you don't have to let anyone else know about it.

If you do chose to go ahead with a SPIS for the property, the question now is do you have the knowledge necessary to accurately answer the questions? What happens if there there is a latent defect that makes the property unfit for living in or dangerous after you sign the SPIS? Are you required to disclose that too?

If you as a buyer walk into a property and discover the seller did not want to sign or provide a SPIS for the property, your first and last thought needs to be what is it they're trying to hide?

One of the criticisms about using the SPIS is you probably don’t understand many of the questions let alone know the correct answers to provide.

So, to help you out let's take a look at couple of the questions to see what information can be provided.

Encroachments, Registered Easements, or Rights of Way


Here are some definitions to help you out.

Encroachment:

"A situation in real estate where a property owner violates the property rights of his neighbor by building something on the neighbor's land or by allowing something to hang over onto the neighbor's property. Encroachment can be a problem along property lines when a property owner is not aware of his property boundaries or intentionally chooses to violate his neighbor's boundaries. This is also known as structural encroachment."

Registered Easement:

"An easement is an interest in another individual's land or property. Easements are typically created by express grant, by implication, by prescription or by necessity. Additionally, easements are classified as negative or affirmative. A negative easement gives the holder the right to prevent another individual from doing some act. Possessors of affirmative easements are entitled to go onto someone else's property for specific purposes."

Rights of Way:

"Right of way is when someone gets approval from someone to travel across their property. It gives that person a type of easement, so that they can use the owner's land to access public places on certain areas of his/her land."

How do you determine if there are any encroachments, registered easements, or rights of way?

Get a property survey prepared.  The property survey will show you where the easements and rights of way are, where the location of the building is on the lot, and other features such as a driveway location, for example. Once you have the survey, be sure to have a professional examine it to determine if there are any issues you need to disclose.

Zoning


For the Province of Ontario, the Ministry of Municipal Affairs and Housing defines your zoning by-law as:

"A zoning by-law controls the use of land in your community. It states exactly:
  • how land may be used
  • where buildings and other structures can be located
  • the types of buildings that are permitted and how they may be used
  • the lot sizes and dimensions, parking requirements, building heights and setbacks from the street."

You can read more about zoning by-laws here or download Citizen's Guide 3 Zoning By-Laws.

Some may say these rules are too restrictive and you, as the property owner, should have the final say as to how you use your property.  That's all fine and dandy if you're a sociopath and lack empathy, but you have neighbours and they also have expectations for their quality of life and enjoyment of their property too.  The zoning by-law describes what type of buildings, business activities, and lot coverage are allowed for you and your neighbours.

To find out information about your property's zoning by-laws, phone your municipality and ask for the Planning or Land Use Department.  They will be happy to provide you with the information, especially if you have plans for building.

Drainage


It's common law you are not allowed, under any circumstance, to drain surface water from your property onto another privately owned piece of property. Period.

If you build a fence, mound up dirt, or do other "improvements" to your lot, you may have impacted the drainage plan for your property.

To prove the drainage plan and your existing property are still as one, a topographic survey is required.  The information for the topographic survey can be combined with the property survey.

Moisture and/or Water Problems


The scope of this questions pertains to the building envelope which is composed of the roof, walls, and foundation.  Anything that gets wet from weather or ground or surface water is impacted.  If there was a leak with any of these systems and it was repaired, it needs to be disclosed.

Considering the vast majority of lawsuits involve leaky or wet basements, it might be worth it to acknowledge if you have a basement and just like every other basement, it used to be a wet, damp, and moist environment.
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