Friday 26 June 2015

To SPIS or not to SPIS.. that is the question.

And you're probably thinking, "uh, what exactly does SPIS mean?"  

SPIS stands for Seller Property Information Statement, which is a standard form available through the Ontario Real Estate Assocation (OREA).  Basically, it's a long list of questions about a property being offered for sale, ranging from ownership and title questions to structural and physical questions about the building. The purpose of the form is to make sure all material facts are disclosed so that buyers are making an informed decision.

Unfortunately it is a bit of a controversial form.  Some lawyers, like Mark Weisleder, think it is a useful form that keeps everything on the level by covering a wide range of information on the property. But others, like Bob Aaron, feel it is too long, unclear, and technical, leaving too much room for misunderstanding and error by sellers. His feeling is that the only people the SPIS is good for are litigation lawyers. 

Some real estate companies still use them regularly. Others have a no-SPIS-unless-absolutely-necessary policy.  (even if you don't do one, a buyer may ask for one in an offer and if it is a firm requirement from them then the decision ultimately falls to the seller)  Personally, I tend not to use them and advise sellers against them unless necessary - buyers should be expected to do their own home inspection anyways.  But of course if there is one available for a property a buyer client is purchasing, I will certainly ask for it.

One alternative use is simply as a guideline for discussion with your  listing agent when you are first putting the property up for sale.  Even if you are not going to give the SPIS to any buyers, it does help you to cover a lot of important points and can highlight issues that need disclosure or further investigation by your agent.

The only caution if you do have a SPIS-guided discussion with your agent but do not intend the form to be given to buyers is to make sure this is clearly indicated on the form.  If not, the agent is legally supposed to tell buyers the form exists and make it available on request, according to Section 20 of the Code of Ethics (Ontario Regulation 580/05) for the Real Estate and Business Brokers Act, 2002, which states: 

20. If a broker or salesperson has a seller as a client and knows that the seller has completed a written statement that is intended to provide information to buyers about the real estate that is available for acquisition, the broker or salesperson shall, unless the seller directs otherwise,
(a) disclose the existence of the statement to every buyer who expresses an interest in the real estate; and 
(b) on request, make the statement available to a buyer at the earliest practicable opportunity after the request is made.

So it is fine to use the form, you just have to make sure it is clear if you intend it for your listing agent's reference only and do not want it to be given to buyers.  If a buyer brings an offer requesting one, you can still make the decision then.  

As always, make sure you are working with a good real estate professional and have a good discussion about the form if they present it.

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