What You See is What You Get in Real Estate
Many people would think that what’s in an Agreement of Purchase and Sale would govern.
It’s what is visible and what a prospective purchaser would think was part of the property.
In LeMesurier v. Andrus (1986) the Ontario Court of Appeal looked at this issue:
- the agreement was for the sale of 9 Dinnick Cres.;
- "having a frontage of 50 feet more or less by a depth of 150 feet more or less and described as 9 Dinnick Crescent,
- being a three storey detached dwelling with private drive to the West of the property".
- The property was on the south side of the street and there was indeed a private drive to the west extending from the street past the west wall of the house to the south, a total distance of 88.54 ft.
- The driveway was paved and bounded on each side by a cement curb.
- Immediately to the west of the westerly curb was a wooden fence which extended the full depth of the property.
- The property had been conveyed to the vendors as "the whole of Lot 70 Plan 1485" which was indeed 50 ft. fronting on Dinnick Cres. by a depth of 150 ft. to the south.
The difficulty was that when a survey was obtained by the defendant it disclosed that the fence to the west was uniformly west of the lot limit although at no point as much as one foot, indeed generally between one-third and three-quarters of a foot.
The Buyer refused to close and repudiated the Agreement. The Sellers commenced an action for specific performance, but eventually resold the property, so were simply looking for damages.
The Sellers’ driveway was over on the neighbour’s property. Part had been there for over 10 years, so the neighbour readily agreed to a Quitclaim and conceded that that portion was indeed owned by the Sellers.
However, the Sellers were greedy and new cement curbs were placed along the boundary so as to capture even more of the neighbour’s property. The neighbour refused to concede here on this point since it was less than 10 years.
Prior to closing, the Sellers removed and replaced the west curb for that portion with a curb which was slightly to the east and two inches narrower so that it was all within the borders of the lot.
Before the removal, the curb had encroached upon the adjoining Lot 69, .25 ft. at the north end and .34 ft. at the south end for a total area of 12.09 sq. ft. so that after the removal, while there was no longer any curb encroachment, there remained an area 12.09 sq. ft. between the curb and the fence which was not part of the paper title of the vendors and could not be conveyed.
So, in dispute was the portion of the driveway as viewed by the visible eye that the Buyer thought she was getting in the deal. The Sellers moved everything so that she was getting “good title”, but to, a somewhat shrunken driveway. The property was now smaller by 12.09 sq. ft.
The Trial Judge thought that this discrepancy was sufficient to allow the Buyer to repudiate the contract. The Ontario Court of Appeal re-examined the and granted the appeal.
Mr. Justice Grange stated:
“I think it is important to note the following:
(a) The new curb commenced at the south end of the most westerly extension of the house.
It did not therefore reduce the width of the driveway from the narrowest point (7.91 ft.) where it passed the chimney.
(b) The reduction in the actual paved portion of the driveway was minimal, being no more than two inches at any point.”
Grange further stated:
“Mr. Morphy for the appellants (the Sellers) argued that there was indeed no failure of title.
The purchaser bargained for "50 feet x 150 feet" and "9 Dinnick Crescent, being a three storey detached dwelling with private drive to the West of the property" all of which she obtained.
Indeed, she received slightly more, namely, that portion of the curb at the north end, quitclaimed by the owner to the west.
He further contended that if the purchaser assumed that the strip of land under the curb throughout its length was part of the contract she did so upon some subjective basis of her own.
There was no such holding out by the vendors and no statement from the purchaser of her understanding. That being so, no extrinsic evidence to vary the contract was admissible.
I cannot accede to that argument.
A reasonable person entering into the contract would assume that the purchase of "9 Dinnick Crescent ... with private drive to the West" would include everything which to the eye appeared part of the driveway, and the curbs clearly were part thereof.
I would find that the contract included the driveway with its curbs, the whole being 50 ft. more or less by 150 ft. more or less.
In fact, the property purported to be conveyed was slightly more than 50 ft. in frontage by a depth of 150 ft. As I have said, the shortfall was 12.09 sq. ft. in more than 7,500 sq. ft. or a discrepancy of .16% of the total property.
Kindly note specifically the observation and comment:
“A reasonable person entering into the contract would assume that the purchase of "9 Dinnick Crescent ... with private drive to the West" would include everything which to the eye appeared part of the driveway, and the curbs clearly were part thereof. “
So, the Court of Appeal is assessing the circumstances based upon what a reasonable purchaser would think. That’s “what you see is what you get”.
Look at the Sellers’ argument:
- Good title to all of the lot as described on the Deed,
Plus, a Quitclaim to more property.
The Court still concluded that there was indeed a “missing chunk of the driveway”. That was the piece that Buyer saw, but the Seller had no title and moved the driveway back.
Mr. Justice Grange further stated:
“The purchaser is entitled to take what he can get with an abatement of the purchase price for the deficiency; the vendor can only enforce the contract if he can "convey substantially what the purchaser has contracted to get".
"The test is therefore
whether the vendors were in a position to convey substantially what the contract called for and in my opinion in this case the vendors have met the test.
The defect is less than 1/600th of the whole property and contains no part of the buildings on that property.”
In this case, the Sellers had already resold the property prior to trial. That minimized their damages.
Where specific performance with an abatement is available to a vendor, he must equally be entitled to the common law remedy of damages with an "abatement" or reduction in those damages for the deficiency of title.
The Court concluded that the defect was only 0.16% of the total area, and reduced the damages by $1,000.00 in order to give credit to the Buyer for the deficiency.
In this case, the Buyer was entitled to a credit for the driveway. This was on the basis of “what you see is what you get”. However, the amount was small. It was only 1/600 of the property size, 12.09 sq. ft. The credit was only $1,000.00.
The Court concluded that the Buyer had to close the deal with an abatement in the purchase price. The Buyer was not allowed to rescind the deal and walk away.
How should you describe the property and the driveway to protect the parties?
This could be rather problematic for real estate agents, you matter what side of the deal you may happen to be on.
In this case, the Sellers conveyed the whole lot that they had on the Deed. In fact, they got more, which they didn’t own at the time of the Agreement.
Describing the potential issues in a properly drafted Agreement will be a challenge for most agents.
It is noteworthy that the Court of Appeal Panel was composed of Justices Howland, Zuber and Grange, all experts in the field and highly regarded in real estate. It would be unlikely ever to have a more prestigious Panel. That means this this decision will likely stand.
In fact, it’s also a Supreme Court of Canada decision. An application for leave to appeal from this decision was dismissed by the Supreme Court of Canada (Estey, Lamer and Wilson JJ.) on December 18, 1986,
Brian Madigan LL.B., Broker