Property Condition Disclosure Statement, in writing or not? #230
CATEGORY: Legally Speaking
TAGS: Contract of Purchase and Sale Property Condition Disclosure Statement
By Gerry Neely
According to the Property Condition Disclosure Statement (PCDS), the questions and answers within it become part of the Contract of Purchase and Sale, "if so agreed in writing by the vendors and purchasers." The question is whether they become part of the contract even if there is no written agreement between the parties.
The provincial court judge, referred to in the case discussed in Column #219, stated that an owner who gives a Property Condition Disclosure Statement to a purchaser intends the purchaser to rely upon the representations contained within it. In a recent B.C. Supreme Court case, in which the former owners were sued for damages, the purchasers claimed that the answers given in the PCDS misrepresented the state of the septic tank and plumbing systems.
While the judge found the owner's answers to be truthful and dismissed the action, he raised the question of whether the answers constituted representations, which amounted to warranties as to the condition of the septic tank and plumbing system. He reviewed the PCDS and the advice that the parties should agree in writing, if it was to be part of the Contract of Purchase and Sale.
The manner in which he addressed this question indicates that he considers that this agreement must be made by the parties, if it is intended that an owner's untruthful answers wifl create a breach of contract. His comments may not be followed by another judge, but they serve as a reminder of the desirability of a written agreement as evidence of the parties' intentions. In neither of the preceding two cases did the reasons for judgement indicate that the Contract of Purchase and Sale contained the parties' agreement concerning the PCDS.1
Licensees who spent a great deal of time and money in the listing and sale of property were unsuccessful in obtaining a court order giving them priority for their commission over the claims of mortgagees and lien holders, in circumstances where the amount of the encumbrances exceeded the value of the property.
They had found a purchaser for the registered owner from whom they had a listing. The registered owner applied for an Order approving the sale to the purchaser and for the discharge of the mortgages and hens. The agents realized that they were unlikely to collect their commission from the owner, and applied for an Order that payment of their commission had priority over the mortgagees and hen holders.
The master who heard the argument denied their claim stating that they could only have priority if they had obtained the agreement of the encumbrance holders or a court order, before commencing work.2
Section 30 of the Condominium Act allows a strata corporation by special resolution to limit the number of units that may be leased. Two cases in the Supreme Court of British Columbia decided that proposed bylaws that prohibited leasing were unenforceable. in reaching this decision the judge in the most recent case expressly refused to follow the reasoning referred to in the case discussed in Column #210, where the judge decided that a bylaw prohibiting leasing was valid.
This means that strata corporation bylaws restricting leasing will have to allow at least one unit to be leased if the bylaw is to be enforceable. This then brings into play the limitations referred to in Column #210 of a strata corporation's right to restrict occupation to adults only.
This case also provides some guidance to strata councils as to the method by which notices of meetings may be given easily to strata corporation members. A notice of the special meeting at which the bylaw prohibiting leasing was to be voted upon was also challenged because it was slipped under the doors of the strata units. Section 129 of the Condominium Act states that a notice of meetings of strata owners is sufficiently given if mailed to the owner, or left with the owner or some adult person at the address of the strata lot. The judge said the notice was valid because this section did not prevent delivery of notice in this manner.3
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