Last week, I wrote about Caveat Emptor aka Buyer Beware when purchasing a home in Ontario. A Buyer has to be diligent in their home search to identify any and all defects in a home which is easier said than done in certain markets.
In the hot Seller’s markets of the past few years, most Buyers only had 15-30 minutes in a home before deciding whether or not they were going to pursue that property, often competing with other buyers in a very fast paced and challenging market.
Today, Buyer’s are having an easier time examining homes in detail before making an offer, often times including an inspection condition. A home inspection that is performed by a licensed and experienced inspector can often reveal a lot of potential issues in a home that may or may not have been apparent to the Buyer before making their offer.
At this point, the Buyer should be aware of anything that they need to consider before deciding to move forward with the purchase. But like I said, in hotter markets, this level of knowledge is hard to come by and aggressive Buyers will usually proceed into a somewhat unknown situation. Also keep in mind that an inspector is somewhat limited to what they can inspect. Any finished areas are or surfaces are off limits to an inspector. They can’t poke holes in walls or ceilings to see what’s happening behind the drywall which could limit their ability to detect water damage, mould or a host of other issues.
So, with an understanding of what a Buyer must (or should) do to educate themselves during a home purchase, let’s look at what is required of a Seller.
Surely, a Seller can’t list a home that is deficient in many of the areas listed above without saying anything to a potential Buyer, right?
Wrong… to some degree. A Seller is required to disclose any “material latent defects” that they are aware of. After all, you can’t expect somebody to tell you about a mould infestation in an attic that they have never looked at.
That is the big grey area when it comes to Seller disclosures. What are they aware of in the home that they should be telling you about. And when I say “material latent defect” that is something that is not readily visible by a Buyer walking through a home. Smashed window? Not a latent defect. Cracked foundation? Depends if it’s in a finished or unfinished part of the basement. Basically anything that you can easily see while walking through a home does not require a disclosure.
I’ll return to the example I used last week about the missing load bearing wall. That is not a latent defect in my mind because you can obviously tell that a wall was removed where there previously was one. Anyone that knows anything about construction could identify that as a load bearing wall within 15 seconds, but for those that aren’t as well versed would have employed an inspector to tell them the same thing. So in my mind, the Seller is not required to disclose that there is a missing load bearing wall. Being that they took it out, they also might not be aware that it was a load bearing wall in the first place. Oh well.
I find that most Sellers do their best to get ahead of any issues that they are aware of in a home by making full and honest disclosures in private sections of the MLS that are readily viewed by other Realtors. If there was water damage that they fixed, or knob and tube wiring, or any number of other situations that would likely require a disclosure, they will usually be very up front about it.
Now what happens when a Seller doesn’t disclose a latent defect to a Buyer? (I’m not a lawyer, so I will say…) Time to lawyer up! If you bought a house that has a defect, that you could not see during a showing or home inspection, that you think the Seller knew about, you’re going to have to pursue legal action. From that point, it is up to you to prove that the Seller knew about the defect before selling you the home, and then withheld that information from you. Again, I’m not a lawyer, so I would recommend that you always seek legal advice in a matter such as this and strap in for a long and painful process.
I do want to say one thing when it comes to disclosures and what a Buyer feels that they should be told, or how they feel after something happens in their new home after closing. Home ownership comes with the responsibility of fixing, maintaining and updating your home, and that doesn’t end. So after you move in and something goes wrong, or something breaks, and you think “they should have told us about this! We need to sue them!” know that it is likely bad timing, or is just something that comes with the territory of owning a home.
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