Recently, TheStar.com posted a fantastic article written by Bob Aaron, a Toronto Real Estate Lawyer, about the importance of home inspections. The story of the article revolves around responsibility when something goes wrong in a home purchase: who is responsible? While the idea of “trust” and taking someones word about any issues when purchasing a home sounds great, it’s always a major red flag, regardless of who you are dealing with for the home purchase.
In the case of the article, the buyer and seller were both members of the Freemason’s fraternity and “could trust each other.” Later, after the closing deal occurred, the purchaser hired a carpenter to paint the house and perform basement repairs. The carpenter noticed that the basement carpet was wet, and discovered flowing water under the floor covered in black mold without any vapour barrier between concrete and the strapping. This also let to mold on the baseboards and drywall, all of which had to be removed. Even further, mold spores were discovered in the ceiling and on the walls of the fireplace.
The article continues to reveal even more issues that resulted within the house. The damages amounted to $85,000, which the buyer sued the seller for. However, the court stance on home purchases is buyer beware. The claim was thrown out.
“If there are no representations or warranties in a purchase agreement, a seller is not liable in damages to a buyer, but there are exceptions:
- Where the seller fraudulently misrepresents or conceals an issue;
- Where the seller knows of a hidden defect which makes the house unfit for habitation, and fails to disclose it to the buyer;
- Where the seller is reckless about statements made relating to the fitness of the house for habitation.
After a four-day trial last April, Justice Russell Raikes threw out the buyers’ claim. He ruled that they had not inserted any contractual protections in the offer. “I find,” he wrote, “that the buyers were ignorant of the water drainage/leakage and mould contamination issues anywhere in or around the house.” He added that “this is not a case of concealment.”
Author Bob Aaron continues: Not only did the buyers lose the case, but they had to pay their lawyer as well as a portion of the defendants’ legal bill.
The lessons to be learned from this sad case are:
Rule 1: Always insert a home inspection condition in an offer to purchase;
Rule 2: If you ignore Rule 1, insert representations and warranties in the agreement about the condition of the property;
Rule 3: if you ignore Rules 1 and 2, don’t expect to be compensated for any problems you discover after closing.
Link to TheStar article: https://www.thestar.com/life/homes/2016/12/17/home-inspections-are-your-best-friend-property-law.html