There has been a great deal of controversy recently surrounding a real estate form called a Seller Property Information Statement (SPIS).

The SPIS is typically completed by a Seller at the time of listing. The intent of the document is to offer protection for all parties, including realtors, involved in a residential real estate transaction by providing important information to prospective buyers and disclosing patent (or known) defects in a property.

By completing the form, a seller is asked to provide information relating to third party ownership interests, leases, easements, encroachments, surveys, zoning, restrictive covenants, drainage restrictions, taxes, etc. There are also disclosure questions about environmental issues, possible soil contamination, oil tanks, previous growth of illegal substances, known structural problems, renovations, moisture problems, and much more.

The SPIS includes a statement that the seller is not providing information relating to psychological stigmas that may be associated with a property. Therefore, buyers need to do their own research and ask questions if they have concerns. (Stigmas commonly include a death in a home, natural or otherwise, "haunted" houses, etc.)

There is a disclaimer on the SPIS stating that "the information is being provided for information purposes only and is not a warranty... even if attached to an Agreement of Purchase and Sale". Even so, sellers who complete an SPIS are always advised to answer questions accurately and to the best of their knowledge to avoid possible future liability.

The Issues

While the SPIS is a valuable tool for sellers and buyers alike, there are two problems often associated with the form.

The first issue is that sellers don't always fill them out accurately and completely. Some would rather not disclose a problem that could affect the purchase price or salability of the property. Unfortunately, they leave themselves open to possible legal action if a problem is discovered later, and it can be proven that the sellers were aware of the problem.

The second issue is that many questions in the SPIS may be considered either ambiguous or beyond the scope of what most sellers can reasonably be expected to know. This is the argument that many real estate lawyers use to discourage sellers from completing an SPIS - potential liability that may result from incorrect information even though sellers may have answered questions in good faith and to the best of their knowledge.

For more information and some good reading, you may wish to search articles written by real estate lawyers Mark Weisleder and Bob Aaron at the Toronto Star website yourhome.ca.