Experts: go beyond home inspections

An SPIS is a document that details the vendor’s knowledge of a property through the answers to 47questions. Criticized as a “gold mine for litigation lawyers” by attorneys such as Bob Aaron, but praised by regulatory organizations (RECO hails the SPIS as “an integral part of a real estate transaction”), the form has left industry experts divided regarding who the document actually serves.

Does an SPIS, for example, help or hurt investors?

Alex Weiner, president of HomeVerified and an investor himself says running a report is an affordable but crucial step when inspecting a home, and one every investor should take.

“We’re always amazed what you can find out about the history of a home prior to purchasing, but for most Canadians a home history report really wasn’t part of the due diligence,” he says. “OREA advises that sellers protect themselves and advocate for an SPIS, but it’s not required by law. It’s considered best practice. If the seller provided a potential buyer with an SPIS form, buyers could see things that aren’t readily apparent through a regular home inspection.”

While the seller is legally obligated to inform a potential buyer of any problems that may not be detected during such an inspection, the SPIS accesses the history of insurance claims on the property to uncover issues that may have been there, and may continue to dog the property, that a face-value inspection wouldn’t catch. Damage from water, sewage, fires, wind and hail can be covered up, but companies that perform an insurance background check can reveal details of claims for such damages right down to the date and dollar value.

Weiner says obtaining an SPIS is a valuable tool for investors to use in conjunction with a Realtor and home inspector, as claims can be found anywhere, any time.

“About 30 per cent of homes would have had an insurance claim at some point, and about 2/3 of those claims are water damage,” he says. Weiner knows the woes of such damage, after a rain storm caused severe flooding in his own student rental property near the University of Western Ontario. The flood caused $12,000 worth of damage, and an SPIS report filed two years later revealed there had already been two claims against water damage on that property.

“As an investor, if you’re considering buying a house to have tenants in and not to flip, it becomes even more crucial to know as much about the history of the property as you can.”

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