Ontario

I can honestly say this past month in Real Estate has been crazy and challenging as a Realtor (for myself anyways!) - with so little inventory on the market it's hard to keep your Buyers happy - we must practice patience! With practically every offer becoming a MULTIPLE offer scenario be ready to put your best foot forward and have your financing all figured out!

According the Ottawa real estate board President Rick Snell "Resale home sales still riding high in Ottawa"! During the month of October members sold 1,202 residential properties through the MLS system which is an amazing increase of 24.7% over October of last year!

"Once again we saw record-setting sales numbers for the month of October. This brings our sales year-to-date to four percentage points higher than the same period last year. Ottawa's resale market has been buoyed by buyers taking advantage of low interest rates," said Board President Rick Snell. "Listing inventory remains at a low level, and combined with brisk sales, indicates that we are still in a strong sellers' market here in the capital," he added.

Below you'll find a review of October's real estate numbers - such a dramatic increase with double digits accross the board!

The average sale prices are as follows:
- Average residential/condo sale $318,655 increase of 13.6% over Oct of last year
- Average condo sale $232,046 increase of 14.6% over Oct of last year
- Average residential sale $343,745 increase of 13.3% over Oct of last year

If you're a Seller and you've been tossing around the idea of selling this would DEFINATELY be the right time - prices are rising due to low demand and properties are selling quickly! If you're a homebuyer out there practice your patience and share your thoughts with your Realtor. We understand that sometimes homebuyers change their minds, especially if what they are looking for isn't available - we need to know what you're thinking to help you!

Wether you're a buyer or a seller in orleans, pineview or ottawa i'd love to help! Visit http://www.christianelafleur.com/ or call me directly anytime (613) 859-0809.

SPIS ~ Statement Fails to Disclose Material Easement

By Brian Madigan LL.B.




The Macdonald and Robson matter was an application in the Superior Court of Justice of Ontario for an order rescinding an agreement of purchase and sale.

The purchaser Mr. Macdonald had submitted an offer to acquire certain property owned by the vendor Robson. The transaction was to close on 28 April 2008 and the matter proceeded to Court 3 days before closing.

The property comprised 2 acres of rather picturesque property backing onto conservation lands in Flamborough, Ontario.

As it turned out, there was an easement in favour of the Township over one half of one acre or 25% of the property.

The vendor had completed a Seller Property Information Statement (SPIS) indicating:

"in response to a question inquiring whether there were any easements, the answer given was "unknown, on survey".

In another question asking if the survey showed the location of all easements, the response was "yes, written location of sunroom".

A survey was produced ......, but it made no reference to any easements."

The motions Court Judge said:

"There was no suggestion that the vendor's were aware of the existence of the easement or that any misrepresentation was made. Rather, the vendor's argument before me was that the existence of the easement did not materially affect the purchaser's use of the property, principally because there are other areas on the property where Mr. Macdonald would be permitted to build his drive shed and other structures. The respondent relies on the decision of Stefanovska v. Kok reflex, (1990), 73 O.R. (2nd) 368, arguing that Ms. Robson, the vendor can convey substantially what Mr. Macdonald contracted to get.

Justice Forestell in Ridgely v. Nielson, [2007] O.J. No. 1699, noted that there are four factors to be considered in determining whether an easement is material:

1) the location of it;

2) the size of the easement;

3) the point of access; and

4) the owner's enjoyment of the property."

Consequently, the Court determined that the purchaser was entitled to rescind the agreement.

COMMENT:

Although there was a SPIS completed in this case and although it was incorrect, the decision of the motions Court Judge was made on the basis of contract alone.

In all likelihood, should the matter of misrepresentation have been made an issue, then the Court would probably have directed the trial of an issue. The important matter to bear in mind in this case, is the issue of costs. Such a proceeding would have been substantially more costly than an application in motions Court. In this case, the Judge saved both litigants some expense, by disposing of the matter summarily.

Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Royal LePage Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com

Active Concealment of Damage Eliminates "Caveat Emptor"

By Brian Madigan LL.B.

Mr. and Mrs. Whaley purchased a small house from the vendors Mr. and Mrs. Dennis in 2002 . The property was located in the Niagara Peninsula and was intended to be the retirement home of the purchasers.

The case of Whaley vs. Dennis came on for trial in the Superior Court of Justice in October 2005 before the Honourable Mr. Justice Quinn. A matters in issue were false statements made pursuant to the Seller property Information Statement.

Mr. and Mrs. Dennis purchased this property in 2002. They decided to list the property for sale and in that connection executed a Seller Property Information Statement.

Earlier, in the Summer of 2001, Mr. Dennis obtained two quotations for work to the septic system. He retained one company to dig a trench but not complete the connection. He decided to do this himself, because otherwise he would require a permit. Also, Mr. Dennis constructed some drywall in the basement.

Specifically, they made certain representations which are the subject of this lawsuit:

"Are you aware of any problems with the septic system?" Answer, "Unknown."

"Are you aware of any moisture and/or water problems in the basement or crawl space?" Answer, "No."

An agreement of purchase and sale was executed and was conditional upon both a home inspection report and a septic inspection satisfactory to the purchasers.

The trial Judge stated:

"The plaintiffs waived the conditions in the agreement of purchase and sale regarding both the home inspection and the septic tank inspection. I was never told why. In respect of the latter, which had not yet been carried out, it certainly was an unwise move and probably prompted by the realtor representing the plaintiffs. I doubt whether the plaintiffs understood what they were doing. However, by executing the waiver, I conclude that the plaintiffs cannot be said to have relied on the septic-system inspection in deciding to complete their purchase of the Property."

The Spring of 2003 was the first wet season encountered by the plaintiffs at the Property. They began experiencing a strong odour of sewage. In addition, the basement flooded. The leakage (or most of it, at least) seemed to originate from the front side of the house as opposed to the rear where the septic tank was situated. It was the testimony of Mr. Dennis that, while he and his wife owned the property, they did not experience moisture in the basement.

During the exterior remedial work subsequently carried out by Robson (the purchasers' contractor) a crack was discovered in the front basement wall about one-quarter inch in width. Robson testified that the crack seemed to be an old one: it was discoloured and had a growth of moss. When Mr. and Mrs. Dennis purchased the Property they removed the existing drywall in the basement and replaced it with new drywall. The crack would have been visible to them then and they concealed it with the new drywall. It is also curious that, while they occupied the property, Mr. and Mrs. Dennis did not place coverings of any kind on the basement floor and they did not use the basement as a living area. In a home having less than 700 square feet of living space, would they not occupy the basement, if it were habitable?

The seriousness of the sewage-system failure is abundantly clear from the fact that, following the inspection by Murray on May 2nd, Regional Niagara Public Health Department issued an order to the plaintiffs regarding sewage escaping "from your sewage system or septic tank onto the ground or into a water source."

The relevant parts of the order state: "....immediately stop the discharge of sewage escaping onto the surface of the ground."

Discussion by the Court

"patent and latent defects

[19] There can be no question that the problems with the septic system and the basement are defects. But, are they patent or latent defects?

[20] A latent defect is "some fault which one would not expect an ordinary purchaser to discover during a routine inspection"

[21] A patent defect is "something which an unsophisticated purchaser can discover on cursory inspection"

[22] Whether a purchaser should be taken to have been aware of a defect involves the application of an objective test.

[23] The defect in the septic system at bar is a latent defect. If it was not noticed by [the septic system inspector], it certainly is not something the plaintiffs would be expected to discover during a routine inspection of the Property.

[24] Where a vendor actively conceals a latent defect he or she can take no protection from the doctrine of caveat emptor ("let the buyer beware") and the purchaser is entitled to sue for rescission or damages. In other words, a latent defect known to a vendor must be disclosed to a purchaser.

[25] On behalf of Mr. and Mrs. Dennis, it is argued that the answer "Unknown" recorded on the Seller Property Information Statement should have put the plaintiffs, or at least their realtor, on notice to the possibility of septic-system problems. I respectfully disagree. At the time, had the plaintiffs inquired of Mr. and Mrs. Dennis, it is likely (based on the testimony of Mr. Dennis) that the conversation would have gone something like this:

Plaintiffs: We notice that you checked ‘Unknown' in response to the question ‘Are you aware of any problems with the septic system?' What does that mean?

Mr. and Mrs. Dennis: Well, the septic system is very old, 40 years old in fact, and we do not know what condition it is in.

Plaintiffs: But, you were not asked to describe the condition of the system. The question relates to ‘problems with the septic system.' So, will you say whether, during the time that you have lived on the Property, you experienced any problems with the septic system? You would know that, correct?

Mr. and Mrs. Dennis: Yes, we would. And, during the time that we have lived here, we have not had any problems with the septic system.

Therefore, it is somewhat Machiavellian to suggest that the plaintiffs should have used the answer "Unknown" as a basis for further inquiry of Mr. and Mrs. Dennis.

[26] As I am persuaded by the evidence of Giroux and Zwierschke that Mr. Dennis (and, undoubtedly, Mrs. Dennis, as well) knew the septic system was defective, I easily find that those defendants actively concealed the existence of the defect by not bringing it to the attention of the plaintiffs. Therefore, Mr. and Mrs. Dennis are liable to the plaintiffs for their septic-system damages.

[27] Regarding the basement leak, I also find that it would not have been discoverable by the plaintiffs during a routine inspection of the Property. It was actively concealed behind the drywall installed by Mr. and Mrs. Dennis."

Consequently, the trial judge found in favour of the purchasers and awarded damages against in the vendors for misrepresentation.

COMMENT:

This is a case involving actual concealment of known problems. To say "no" to the septic system issues when the vendor had sought to repair the system does not make any sense. Further to say "unknown" when the vendors concealed the water leak by drywall also causes problems. The statement "unknown" is a further act of concealment.

A substantial difficulty for vendors and septic systems is often that the same contractors will be called by the purchasers later on to repair a problem. Invariably, they will say, "we've been here before..... there were all kinds of problems.... the vendors decided it was too expensive to repair".

That kind of response is very difficult to disprove and offers the very best evidence for a plaintiff. When there is clear evidence of deliberate false statements the Court will take steps to ensure that the plaintiff is compensated.

You will note the fabricated conversation between the parties that was speculated by the Court. Obviously, if the trial Judge feels that way, about the vendors' conduct, then they are going to be found responsible.

Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Royal LePage Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com

The table shows how many real estate sales there have been in Muskoka so far this year, compared to 2008 sales. Price ranges and this months sales are included to show you who is in the market for buying property.

It is interesting to see that those who have 1 million plus to spend, have bought more properties compared to 2008.

Notice that the other price-point increase has been between $260,000 - $500,000

Overall there has been a definate 'bounce-back' in the real estate market since last year. Lower mortgage rates has helped, along with consumer confidence levels being alot higher than that 12 months ago.

For a more detailed report on homes in your local area, please contact Sasha Dear via email.

Sasha Dear - salesperson

Royal LePage Lakes of Muskoka Realty - Brokerage, independently owned and operated.

Statistics courtesey of Haliburton and Muskoka Real estate Board