Failure to disclose issues can result in a costly outcome.

If you are selling your home, choosing to make false or inaccurate statements on your Property Disclosure Statement can have expensive consequences.

Below follows an article published on Castanet January 23 2020 that explains the circumstances leading to a very expensive judgement against sellers that made a significant misrepresentation about the water issues in their basement.

Nicholas Johansen – Jan 23, 2020 / 5:00 am
An Okanagan couple must pay more than $160,000, after they failed to properly disclose the serious flooding issues they’d had at a West Kelowna home they sold in 2016.
Earlier this month, Justice Gary Weatherill ruled in favour of Cheri and Joel Brunning, in their lawsuit claiming fraudulent misrepresentation and breach of contract against Robert and Benigna Cummings.

Over more than two weeks of trial, court heard how the Brunnings had purchased the Glenrosa home from the Cummings for $371,000 in May 2016.

While the Cummings had disclosed there had been “some seepage recently on the basement floor” in their Property Disclosure Statement, they answered “no” to the question: “Are you aware of any moisture and/or water problems in the walls, basement or crawl space?” This turned out to not be completely accurate.

The Cummings had purchased the home in September 2014 as a “fixer-upper” for $210,000. They’d previously flipped a handful of renovated homes as a source of extra income.
In less than a year, they had completed their renovations, but the housing market had slowed at the time, so they chose to rent out the home in December 2015.

A few months later, the new tenants noticed the basement suite’s carpets were wet. It was the first sign of things to come.
The Cummings pulled up the carpets and found water seeping through cracks in the concrete floor. While the Cummings testified the water amount was minimal, the tenants testified it was “substantial.”

The tenants stacked their furniture in non-affected areas of the basement, but were soon forced to move it upstairs and into the garage when the flooding spread.

In late February, Robert Cummings dug a four-foot sump well at the rear foundation of the house, and pumped out water into a white PVC pipe on the property, which he assumed was a sewer access pipe. While this appeared to initially solve the problem, the flooding returned in early March, and the entire basement suite was unusable for almost two months. The tenants describing the water as “ankle deep.” The water receded in April, and the Cummings testified that as far as they were concerned, the flooding issue was fixed.

On April 3, 2016, the Cummings installed new carpet and underlay in the basement, and listed the house for sale the same day.

The Cummings accepted the Brunnings’ offer on May 25, and after a home inspection found no issues with water infiltration, the Brunnings took possession on Aug. 3.

What the Brunnings didn’t know was that less than a month before they took possession, the Cummings’ tenants reported water coming up through the carpet in the basement again. The Cummings concluded the tenants were “messing” with them, perhaps upset about having to vacate the home, and dismissed the flooding as a “non-event.” Justice Weatherill concluded otherwise, and found their failure to report the incident to the Brunnings breached their disclosure obligations in the purchase contract.

The Brunnings first run-in with flooding issues at the house came in February 2017, almost one year exactly since the Cummings first dealt with the issue. After working to remediate the flooding, it returned significantly in March, lasting for six weeks. Joel Brunning installed five sump pumps around the property and dug a drainage trench, leading the water to the same white PVC pipe the Cummings had used.

The efforts did little to combat the flooding though, and it has returned every spring since, as well as in September 2019.

Jennifer Anderson, a geotechnical engineer hired by the Brunnings, recommended upgrading the perimeter drainage, installing a sump pump in the basement, and regrading the ground to direct water away from the house. If that failed, she recommended raising the entire home by one metre.

In his ruling, Justice Weatherill ruled the Cummings “deliberately misled” the Brunnings.

“Their suggestion that ‘some seepage recently on the basement floor’ was ‘rectified’ by installing the sump pump was a deliberate misrepresentation of the true state of affairs, calculated to mislead a potential buyer into thinking it was a minor issue when they knew it was not,” Justice Weatherill said.

He found them guilty of fraudulent misrepresentation and breach of contract, and ordered them to pay the Brunnings $140,000 in remediation costs, along with another $28,000 in special and general damages.