Imagine you have just completed your purchase of your new home. It has been a long and stressful process but now you can finally relax. You have a seat on your sofa. At that moment, you hear a faint, splashing noise, coming from the basement. You head downstairs to investigate, only to discover that your entire, beautifully-finished, basement has been flooded in 3 feet of water. In a situation like this, a purchaser can’t help but wonder who is responsible.
Is the Seller Responsible? Do they have a Duty to Disclose Physical Defects?
It may surprise many home buyers to find out that the rule of caveat emptor (“buyer beware”) still holds fairly strong in Ontario and there is no duty on the part of a seller to disclose defects in the property except in very limited circumstances.
The “buyer beware” rule essentially means that the purchaser will take the property as he/she finds it, in whatever condition, whether good or bad.
The exceptions to this rule are limited and occur mostly in situations where there has been some sort of misrepresentation by the seller, that is negligent or fraudulent.
In this context, a seller’s failure to disclose a defect can be interpreted by the courts as a negligent or fraudulent misrepresentation or some other actionable wrong but only in limited circumstances where the defect is a “latent” one, that renders the property dangerous or uninhabitable, and the seller knew about it.
A “latent” defect is one that cannot be discovered by a reasonable, thorough inspection of the property. In other words, it is hidden. This is a very limited set of circumstances.
How Can I Protect Myself?
Since there is little protection for a purchaser in these situations, a prudent buyer needs to do everything possible to protect themselves. Some things that can be done are:
What if I’m Buying a New Home?
A buyer of a new home is afforded much more protection against latent defects. These protections are in the form of warranties that are colloquially known as “Tarion warranties”. These warranties cover different items and last from one to seven years.
Tarion provides a general outline of the applicable warranties and their deadlines which can be found at the following website: https://www.tarion.com/hip/your-homes-warranty-coverage-glance. In addition, reviewing the applicable Homeowner Information Package, will give you more thorough information on all warranties applicable to your purchase. You can download your package off of the Tarion website at the following links: