Does the Seller Have to Disclose a Severance Condition?
There was a rather interesting case involving a property in the Niagara Region backing onto the escarpment. The lot was larger large, so the property was severed into two parcels.
The new lot had certain conditions imposed upon it under the Planning Act.
The conditions provided that the owner enter into an agreement with the municipality requiring that any dwelling to be constructed on the property be:
1) set back from the shoreline at least 30 m. and
2) be above a specified elevation.
The agreement was entered into and was registered on title.
So, the interesting question is whether or not the Seller who was personally quite knowledgeable about these two conditions was under any legal obligation to disclose them to a potential purchaser.
The Agreement of Purchase and Sale made no mention of this, nor did the Listing. The information was determined by the Buyer’s solicitors during the purchase.
What is in issue is that the rear set- back of 30 m. was not disclosed to the defendants at the time of execution of the contract of purchase and sale although the fact was known to the plaintiff.
The Buyer’s lawyer wanted this severance condition removed. The Seller’s lawyer declined.
Mr. Justice Trainor, the Trial Judge stated:
“The restriction imposes limits on choice of dwelling location, design of building and use of the slope for building purposes.
The 30 m. restriction is a hybrid.
It does not fall within the category of a restrictive covenant, or a zoning or building by-law. Section 29(25) of the Planning Act, R.S.O. 1980, c. 379 (s. 29(12)(a) of R.S.O. 1970, c. 349), provides:
29(25) Every municipality and the Minister may enter into agreements imposed as a condition to the giving of a consent and any such agreement may be registered against the land to which it applies and the municipality or the Minister, as the case may be, shall be entitled to enforce the provisions thereof against the owner and, subject to the provisions of the Registry Act and the Land Titles Act, any and all subsequent owners of the land.
I have concluded that the agreement registered on title is a defect in title.
It does not go to the root of title nor is it a matter of conveyance. Even though the 30 m. set-back is not a restrictive covenant, it is a restriction within the meaning of that word as it appears in para. 9 of the agreement of purchase and sale, and thereby not subject to requisition. If I am in error in this conclusion the purchasers were none the less bound because of their failure to make a timely requisition.
The defendants say that a vendor has a duty to disclose a restrictive covenant. That is not the law. The duty to disclose is limited to breach of a restrictive covenant of which the vendor has knowledge."
So, it was a defect in title but not a restrictive covenant. And, the only obligation to disclose was with respect to a restrictive covenant (and this was a hybrid) and one which was in breach, basically because the Seller knew he was breaching it.
That was not the case here. No one was applying to build or had built a non-compliant building. It was an empty lot.
This means, of course, that the Buyer has to undertake his due diligence before the Offer is submitted, or place an appropriate building condition in the Offer, at the outset.
Interested in the case, it went to the Ontario Court of Appeal on January 9, 1986, see: Todd v. Haslhofer.
Brian Madigan LL.B., Broker