Real Estate

Account for every inch of your property when selling: Bernstein

By Paul Russell, AdvocateDaily.com Contributor

People selling a property must ensure they describe the land accurately or the buyer has a valid reason to back out of the sale, says Toronto real estate lawyer Daniel Bernstein.

He cites a recent Ontario Court of Appeal decision where a woman agreed to sell her house — advertised as having a recently upgraded heated private driveway and a garage — to a couple. Between the signing of the agreement of purchase and sale (APS) and the date the transaction was to close, a neighbour said two feet of the driveway belonged to them, a claim backed up by a survey of the property.

The woman was unsuccessful in settling this dispute with the neighbour, court documents state, and the buyers backed out of the purchase since the vendor could not convey clear title to the entire driveway. She sued the couple for damages for the failure to close, and they countersued, demanding the return of their deposit.

The motion judge found in favour of the would-be buyers, as did the appeals court. According to the judgment, the motion judge stated, “any reasonable person would assume that the driveway referred to in the APS [for the home] would include what appeared to the eye to be the driveway … not seven feet wide but nine.”

“Sellers must always accurately describe your property as exactly as you can,” says Bernstein, a founding member with Weltman Bernstein.

“The decision made sense to me that when the buyers saw the driveway, they would assume it would be fully part of the property,” he tells AdvocateDaily.com.

Since the land survey refers to a seven-foot driveway, Bernstein says is it possible the seller knew the driveway was not all on her land.

“If the seller suspected that her part of the driveway was, in fact, only seven feet wide, the agreement should have specifically stated that she only owned 7/9ths of it,” he says. “If she did that, I think the buyers would have been obligated to close the deal.”

According to court documents, the APS contained a clause reading the buyers accept “there is a mutual right of way registered on title to the subject property as per the attached survey (between the houses).” It also stated that “the driveway functions as a private driveway.”

“If you only own seven of the nine feet, then you can’t say the whole driveway functions as a private driveway,” says Bernstein. “Plus, the neighbours said it was not a right-of-way, but was owned by them, so that wasnt a true statement.”

After the dispute arose, the neighbours built a fence, separating the disputed strip of driveway from the rest, court documents states. The woman said that fence restricted her ability to open her car door and it blocked access to the garage.

Court documents state the neighbours wanted $200,000 to give up ownership to the land. When the woman eventually sold the house to another buyer, she said the sale price was negatively affected by the fence, as the home sold for $145,000 less than the first couple initially agreed to pay for it.

“This seems to suggest that the purchasers were correct in refusing to close because they would have received less than they bargained for, which was the full driveway,” says Bernstein.

He questions what would have happened if the couple purchased the house without seeing it firsthand, as the motion judge reasoned, “The physical and visual appearance of the property at the time of the contract were objective facts known to the parties, which are particularly useful in interpreting the meaning of the description of the property in an agreement to purchase a home.”

“If they just bought it from pictures or what they saw online, it would be interesting to see that judicial outcome,” Bernstein says.

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