Water Damages to Owner's Suite, Strata Corporation not Liable #252

By Gerry Neely
B.A., LL.B.

Over a period of four years a ground floor condominium owner experienced water seeping through the exterior wall of her condominium. The frequency and extent of the seepage was sufficient to result in the growth of fungi and bacteria in the soaked carpet, which led to an asthma-like respiratory condition. This cleared up when the owner vacated the condominium for about a year, while work was being done to correct the problem.

She sued the strata council for damages for the negligent performance by it of its statutory duty to repair and maintain the building. Evidence given at the trial established that the strata council had hired a contractor who failed to remedy the problem; that it then took advice from a friend of the owner who was experienced in maintaining public buildings; that it hired another contractor and overall spent about $20,000. The owner sold her unit on an "as is" basis before the remedial work was completed.

The Condominium Act imposes a duty upon a strata corporation to maintain and repair the exterior of the building, which by definition means the outer half of an outside wall. The steps the strata council took, including taking advice from the friend of the condominium owner, were evidence that the members of the strata council were aware of their statutory duties.

They had acted in good faith when they hired the first contractor and the fact that his attempts were ineffective did not make the strata corporation liable in damages. The judge's conclusion was that the strata corporation had done all that could be reasonably done in the circumstances to carry out its statutory duties.1

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A forty yearold army hut was substantially converted to anattractive looking rancher, which was falsely advertised as being three years old. The conversion was done without the benefit of building permits, inspections, or an occupancy permit. The listing salesperson may not have been aware of this when the listing was obtained. However, some of the true state of affairs became known tohim when the first contract for the sale of the house was cancelled by agreement between the seller and a previous buyer, when the buyer became aware through advice from someone with local knowledge, that the house's origin had been the old army hut.

The Property Condition Disclosure Statement, which answered "yes" to the question of whether there was a final building inspection and occupancy permit, and "no" to the question concerning awareness of any additions or alterations, had been prepared by the sales representative

Neither it nor the listing contract were altered after the collapse of the first contract. When the next conditional offer was accepted, it was the buyers' afterthought and question to their agent that led the agent to make inquiries at the regional district offices. Although he discovered that no permits had been issued, his clients were prepared to proceed with the purchase if the seller warranted that the home complied with the 1992 building codes which, by addendum, the sellers did.

The buyers' quickly discovered that the house had many structural deficiencies and many building code violations. The sellers were clearly liable in damages to the buyers for the misrepresentations made by them. The defenses of both the listing agent and salesperson were that the listing salesperson had no discussions with the buyers, minimal discussions with their agent in which no representations were made, and that the listing salesperson could not be expected to know the various requirements of the building code.

To the first defense the judge said that the listing salesperson knew, or ought to have known, that any representations would be passed on by the buyer's agent and that there was no difference in effect between communications directly with a party, or with that party's agent.

With respect to the standards a REALTOR should meet, the judge said that care should be taken not to impose standards that are more probably those to be imposed upon architects, builders, engineers or solicitors. However, while a salesperson cannot be expected to know building codes in every respect, he can be expected to know the relationship between the building code and the municipal bylaw which gives rise to building inspections and the necessity for obtaining building permits.

The listing salesperson's failure to check for building permits meant that he became a party to the misrepresentation of the seller that the house complied with the building code. He acted Negligently when he passed on the seller's representations as being true, when he should have known that the representations were untrue. For a house purchased for $80,000, the damages were $70,000 to be paid by the seller, the listing agent and the listing salesperson.

The reasons for judgment did not disclose whether the agent for the buyers suggested they obtain a home inspection. If the buyer's agent did not, should he not have? The judgment in part was based upon the Code of Ethics and the comments contained in Peter Watts' publication of Real Estate Practice and Ethics, 8th Edition, 1992.2

	1.	Wright v. The Owners, Strata Plan #205, S.C.B.C., Reasons for judgment, February 15th, 1996.
	2.	Johnstone v. Dame et al., S.C.B.C., Reasons for judgment, December 12th, 1995.

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