Dear Ms Markle,
I write to you concerning the situation that you conveyed to me. I understand you recently sold a property. With that, you recently found out that your buyers spent an additional $12,500 for renovation costs, which they believe you should reimburse them with, due to your alleged non-disclosure of the fact.
I perused through several cases and poured through pertinent laws. The foregoing is what I have surmised from the court and from a close reading of your circumstance.
Review of Facts
As I understand from what you have relayed to me during our conversations, your clients, buyers Jennifer and Marie purchased your house in April of 2016 after 4 months of searching. The house has been your residence for a good 45 years. As a 75 year old widow, you decided to sell the house, but not without cosmetically enhancing it, which included minor repairs and repainting the interior and the exterior of it.
Your former house, which consisted of two floors and a basement was advertised in the Mulitple Listing Services Sheet as structurally solid, in excellent condition, was lovingly maintained and that it has been recently updated.
Prior to signing the Agreement to Purchase, the pair decided to waive the house inspection, thinking that any other problems that may arise can be corrected through the renovation that they plan to undertake. Additionally, the APS contained a condition that the signing of the document is not dependent on a house inspection.
The renovations of the couple proceeded smoothly, except that, the contractor found some structural peculiarities which resulted to additional costs. Incidentally, you told them that you and your husband foregone undergoing renovations due to the structural peculiarities of the house. Due to this, the couple feel that not disclosure was not made fully, since they told their agent, and the latter informed your agent that they plan to undertake renovations. Thus, the couple will and may likely bring a suit to recover the amount of $12,500, the amount they spent for the structural peculiarities.
Markle’s real estate agent told Markle that Lemaire and Toews were foregoing a house inspection because they planned to do renovations. Markle did not tell her real estate agent about the structural peculiarities that would increase the cost of renovations. A house inspection would have alerted Lemaire and Toews to potential structural peculiarities.
According to my notes, the term structural peculiarities was how the contractor of the couple described the foundation of the house they purchased from you. With these structural peculiarities, the couple incurred additional costs amounting to $12,500. The contractor however did not disclose what these structural peculiarities are.
In contrast to the binding case of Costa v Wimalasekera, wherein appellant specifically stated that his property was not prone to flooding, because he honestly believed that the occurrence of water accumulation in his property was ponding and not flooding, you did not misrepresent your property’s listing in the MLSS.
The court reiterated in the case of Costa that in interpreting terminologies contained in an agreement, how the general public would understand or appreciate such would be given weight, rather than its technical definition. In the description, you expressly stated that your property was structurally solid. In ordinary parlance, structurally sound would mean that it has no structural defects. Nowhere did the contractor negate your claim, nor did he imply that your property was structurally unsound. On one hand, the term structurally peculiar cannot be said to be equivalent to the term structurally defective. Peculiarity as the dictionary provides would mean something outside of the usual character, something uncommon, something nor ordinary. Thus, no stretch of imagination could be made to equate your representation as structurally sound to mean as having no structural peculiarities.
Additionally, in the binding case of Karwchuck v Scherback, the court ruled in favor of complainant Karwchuck when he claimed that seller Scherback withheld significant information regarding the property. In this case, the court considered as evidence the frequent plumbing and sewer repairs of the seller as indicia that the property had an obvious plumbing problem which the seller not only inaccurately disclosed, but that he had the positive duty to make known more than what was required, because it was what was expected of a reasonable man.
On one hand, in the possible case that may be raised as against you, it cannot be said that you have the duty to disclose that your property had some structural peculiarities, as it cannot be considered as a basic requirement expected of a seller. The court in the same case stated that the duty to disclose more than what was asked was due to the serious underlying structural problems that the property already had. This however is not applicable to your situation, as I have already stated, your property only had a structural peculiarity, not a structural defect.
Reasonable Reliable Statements
According to the APS that your buyers signed, the signing of the same agreement is not conditional on the conduct of a house inspection. Perhaps, you may have the notion that the buyers expressly waived the house inspection and thus cannot claim from you, notwithstanding the condition of the house subsequent to the perfection of the contract. In this light, let me clarify through the case of Karwchuck, despite the agreement containing a waiver that buyers must make their own enquiry as to the property, the court did not absolve the seller from liability. Similarly, despite the APS between you and the coupe having a provision that the signing of such is not preconditioned on a house inspection, it cannot be taken to mean that matters, information, or facts which have to be disclosed, as a reasonable man would, may be waived.
The question now is, did the couple reasonably rely on your statements prior to the purchase of the home. I would like to argue that non disclosure of the fact that your house had structural peculiarities would not have had deterred nor prevented the buyers from pushing through with their transaction.
I believe that your house, as you narrated did not have any patent nor latent defects. The renovation that the couple planned was not conditioned on the physical status of your property. It was their plan to renovate according to their preference. Such conclusion can be made, due to their deliberate refusal to inspect the house prior to the signing of the APS.
On a similar vein, the case of Mauro v Al-Saffar, defendant Hussain Al-Saffar was adjudged liable to the buyers due to his misrepresentation that the house which he sold was “gutted to the bare bones”. With that claim, buyers were led to believe that re-seller Hussain who renovated the property prior to putting it in the market thoroughly stripped the house to its structure, before any enhancements, cosmetic or not were made. This situation is in stark contrast to yours, since you only said that your property was structurally solid, meaning, the foundation is stable and is without patent nor latent defect. In no way can the court deliver a verdict stating that you misrepresented your claim. Additionally, evidence can be made stating that you actually said that you knew of such structural peculiarity, thus negating any claim of bad faith.
Duty of Agent
Another argument that may be perhaps forwarded by your buyers is that, they duly notified their agent that they had plans to renovate. They had the reason and the right to assume that their agent communicated such fact to your agent, and that you and your agent should have had informed them of the difficulty of having a renovation due to such peculiarities. In this light however, should they do so, they need to present evidence that indeed, their agent was not remiss in their duty of standard care; and that their agent has properly conveyed such plan of theirs to renovate to your agent. In the case of Karwchuck, it was stated that the purchaser’s agent has the obligation to verify facts and information concerning a prospective property to be bought. Thus, if any, the agent of the buyers should have had enquired with your agent, or at least conducted an inspection, knowing that his principals, the buyers, originally planned to undertake renovation the soonest. This information had they asked your agent, or enquired from you would have been very easy to obtain, considering the fact that you nonchalantly volunteered for such during your casual conversations with them. For this, I honestly believe you are without fault.
Although I have legal reason to believe you did not misrepresent your property to the concerned purchasers, the court through this doctrine may adjudge you monetarily liable. If they can present proof that their agent communicated to your agent, but that the latter failed to disclose the presence of any peculiarity in the structure due to your similar nondisclosure of such fact, they court may consider you contributorily negligent. As such, the court may require you to partially indemnify the purchasers for the additional costs incurred. I therefore suggest that you settle this amicably with your purchasers.
In reference to the case of Kaufmann v Gibson, I am inclined to suggest that the court following such will not substantially indemnify your purchasers. The rules likewise suggest that without any misconduct from the parties, in this case, without any bad faith, ill intent, misrepresentation nor fraudulent machination from your end, you may only be liable to pay a certain amount of the costs incurred. With that, I believe an amount of $6,500 would suffice. Additionally, refusal of the parties to accept the offer would open them for liability. Thus, it would be prudent to offer them such sum, explaining that the amount was spent due to both parties being in pari delicto.
Request for Instructions
From the foregoing analyses and suggestion I gave, kindly inform me if you wish to push through with my recommendation. If positive, I will forward you a draft of your settlement letter. Should you wish to have additional clarifications in light of any subsequent development, please let me know the soonest. Kindly forward such instruction to my office not later than three weeks. Thus, I would appreciate if you could send it to me on or before March 12, 2017.