To protect your own interests (and future peace of mind) during a home purchase, there are few things you should know that could save you a lot of trouble down the road.
First, the law surrounding real estate in Ontario relies on the legal principle of caveat emptor, i.e., “buyer beware”. It is up to the buyer to satisfy themselves that a property meets their expectations and standards before they buy the property. The consequences of not doing this can be serious, and you cannot count on being able to sue the previous owner for contribution to repairs.
One very important thing to check in a potential home is what defects there may be. There are two types of defects in Ontario real estate law: patent defects and latent defects.
Patent defects are defects that are obvious and visually observable. This means that during an inspection (professional or not), a person would be able to uncover these defects by a visual inspection. They would not need to damage the property in order to see the defect (i.e., they would not need to open up a wall to look at electrical wiring or dig out the foundation to see if it cracked).
Here is the first important thing to remember: a seller has no obligation to tell you about patent defects. It’s up to you or a hired inspector to uncover them. The seller’s only restriction is that they cannot take deliberate steps to conceal the defects. Examples of a patent defect could be things such as cracked patio concrete, dents in kitchen cabinets or exposed wiring.
So during an inspection, don’t be afraid to lift up a carpet to see the condition of the floor, peek behind furniture to look at the wall and open cabinets. Be thorough. Or even better, hire an inspector to do the inspection for you.
A latent defect is a defect that a buyer or inspector could not uncover during a visit or visual inspection. The defect is hidden or not visible. Examples of this include problems with electrical wiring in walls or plumbing. In order to find these defects, for example, a buyer would have to tear down a wall. If a seller is aware of a latent defect, they must disclose it to the buyer.
A seller can be held liable for failing to disclose a latent defect if they knew about it. A seller will not be held liable for latent defects they were not aware of or for defects that develop after the closing of a transaction.
In writing, this seems simple and clear cut, but often times the reality is much more complicated. In addition to figuring out who knew about what and when, a buyer with a latent defect has to worry about limitation periods.
Having the seller complete a Sellers Property Information Statement (SPIS) can be one way that the buyer can determine what the seller knew and when. However, in practice, seller’s often do not agree to sign these.
In Ontario, you have two years from when you discovered the defect or ought to have discovered it to start a civil litigation claim. In order to successfully sue a previous owner for failing to disclose a latent defect, you must show that the seller knew about the defect and that you did not. A seller can avoid liability by demonstrating that they could not have known about the defect and were not willfully blind (i.e., they knew something was wrong but did not investigate it).
If you just purchased a home and nasty surprises keep popping up with your home you never knew about, you may be dealing with a latent defect. Start taking pictures and gathering all the information you can. This means buildings permits, estimates of the damage and repairs, inspection reports, real estate documents as well as any emails or written communication between you and the seller. Armed with that information, reach out to one of our lawyers today to get advice and figure out if legal proceedings are right for you. We can help you through this process.