|Leak Condo Court Case|
Sask v. Brooke - No Reason to Let Your Guard Down
In the recent decision of Sask v. Brookethe British Columbia Supreme Court dealt with a sale of a strata unit in a leaky condominium complex. The decision involved a consideration of what was not disclosed in the Property Disclosure Statement (PDS) and what was revealed in the minutes of the strata council meetings.
The Plaintiff was the buyer of the strata unit. The Defendants were the sellers. No licensees were named in the action. After the purchase, the Plaintiff faced assessments exceeding 560,000 as her share of the estimated costs of repairs to the entire complex. The assessed value of the strata unit plummeted to a small fraction of the purchase price.
The sellers had answered "no" to questions in the PDS that asked whether they were aware of any roof leakage or any other damage due to wind, fire or water. One of the sellers had been the chair of the strata council and member of its building committee prior to the transaction and was the person to whom problems with the building were referred.
The decision involved a consideration of what was not disclosed in the Property Disclosure Statement (PDS) and what was revealed in the minutes of the strata council meetings.
The buyer maintained that she relied on the PDS to disclose problems which the sellers were aware of with respect to both the building and the strata unit because she was also buying an interest in the common property and there were provisions under categories of the PDS which would apply to the building more than the strata unit. The
Plaintiff claimed she was induced to purchase the strata unit by the false or negligent misrepresentations made by the sellers in the PDS.
The sellers took the position that the PDS pertained only to the strata unit and that the sellers did not intend that the buyer treat the document as applying to the entire complex.
The contract of purchase and sale was subject to the Plaintiff "perusing and approving" the strata council minutes, by-laws and financial statements. The minutes for the three months prior to the purchase referred to water leaks in units other than the strata unit being purchased.
The judge did not decide the question as to whether or not the PDS should be interpreted as applying to the entire condominium complex and not just the unit. However, he said that even if it could be interpreted in that manner, the Plaintiff's case failed because the sellers' disclosure obligations were fulfilled by providing the strata council meeting minutes. He stated:
"However, whether or not the sellers were negligent in purporting to confine their representations to the condition of their own unit is not, in my view, determinative of this claim. In light of their concurrent provision of minutes from strata council meetings where leakage problems ~a-ere discussed, the sellers' disclosure obligations were fulfilled in a manner which should have alerted a prudent purchaser to the need to make further inquiries."
The Judge concluded that the Plaintiff buyer had not acted in a reasonable manner by relying on the PDS without reference to the information in the strata council minutes. By providing the strata council minutes, the Judge felt that the sellers "were effectively providing (the buyer) with the history of water leakage problems in the complex."
Just how much comfort licensees should take from this decision is hard to say. The case certainly emphasizes how important it is for a buyer of a strata unit to obtain and review minutes of meetings of the strata council and strata corporation. Irrespective of whether a licensee is acting for the buyer or the seller or in a limited dual agency capacity, provision must be made in the contract of purchase and sale of a strata unit to allow the purchaser to obtain and review, to the purchasers satisfaction, these minutes.
Licensees will almost certainly be exposed to liability if they do not ensure that the minutes that are provided are complete and that the buyer is given sufficient opportunity to review them. A prudent buyer's agent or limited dual agent would make sure that the date for removing the subject clause relating to the minutes provides the buyer with sufficient time to conduct a proper review. Further, a prudent buyer's agent or limited dual agent would make it clear to the buyer that the information contained in the minutes is
very important to the buyer's decision to purchase the unit. When the time comes to remove the subject clause, a buyer's agent or limited dual agent should be completely satisfied that the buyer has conducted a thorough review of the minutes.
The case of Sask v. Brooke properly places the responsibility of reviewing the strata council minutes with the buyer. A prudent licensee will make sure that the buyer has had the opportunity for this review and will make sure that the review has been conducted before the subject clause is removed.