You have read in my previous columns about the duty of a vendor to disclose a latent or hidden defect in a home which a potential purchaser may not see but which the vendor knows about. What about defects in neighbourhoods? If you live in Walkerton and the purchaser is from out-of-town, do you have to disclose to the purchaser that the water supply in Walkerton has caused personal injury and even death? Closer to home, the Gull River is flooding and the MNR has issued a flood advisory warning. You are a vendor and you live along the Gull River. Do you have to disclose to a potential purchaser that your neighbourhood is subject to periodic flooding?
It appears that the test for disclosing defects in neighbourhoods is whether the defect will affect the health or safety of the purchased property and its owners. An example of a case affecting safety involved a retaining wall on the vendor’s property. Behind the retaining wall was a steep cliff. While the vendor owned the property, there was a minor landslide from the cliff area which damaged the retaining wall. The vendor did not disclose this to the purchaser. After the real estate transaction closed, there was a major landslide which destroyed the house. The vendor was liable for not disclosing the defect.
There are many examples of cases involving properties abutting landfill sites which have been converted into park land. Land fill sites produce methane which can lead to an explosion or health concerns if not properly vented. In the landfill cases, disclosure that the park land was formerly a landfill site is necessary to make an informed purchase. This does not necessarily mean a discount in the purchase price of the abutting property. It is true that a prospective purchaser might only be prepared to purchase such a property if the purchase price were discounted to make it more attractive than similar properties further removed from the closed-up landfill site. However, another prospective purchaser might consider that a property abutting a converted land fill site has the offsetting benefit of abutting open space which cannot be developed, for which the purchaser is not required to a pay a premium.