WHEN IS A HOUSING DEFECT THE RESPONSIBILITY OF THE PURCHASER?

Not that long ago I wrote about the benefits of a home inspection on a property to be purchased. Since then I have had several people contact me to ask what would happen if they bought a property without having an inspection and later found a defect in the house. Could they sue??

If you are contemplating the purchase of a resale home you should be aware that the responsibility for defects in resale housing has customarily been placed on the purchaser. It is your responsibility to inspect the property being purchased and to evaluate the fitness of the home.

A purchaser does not have a claim against the vendor for any defects which should have been detected on inspection. No warranties will be implied that the property is of any particular quality or suitable for any particular use. If there are defects, the vendor is under no obligation to disclose them to the purchaser.

These basic rules are known as the legal doctrine of Caveat Emptor or LET THE BUYER BEWARE.

The courts have decided that a strict application of this doctrine would be oppressive and unfair to purchasers so the law provides relief in certain circumstances. The courts have made a distinction between a patent defect and a latent defect. Patent defects are defects that are discoverable on a superficial inspection of the property by an ordinary purchaser. A vendor does not have a duty to draw the purchaser's attention to patent defects. An example of this might be a large crack in the side of the house.

If the purchaser fails to observe patent defects when inspecting the property he cannot later complain about them. The doctrine of caveat emptor applies.

Latent defects are defects which an ordinary purchaser would not be expected to discover in a routine inspection of the property. An example of this might be termite infestation.

In a situation where a latent defect is unknown to either the vendor or the purchaser but is discovered after the signing of the agreement of purchase and sale, the courts have generally decided in favour of the vendor and the purchaser must take the property as is without compensation for damage occurring as a result of the defect. This is a common scenario.

If the vendor knows of latent defects but does not disclose them to purchaser, the doctrine of caveat emptor may apply but if the defects are actively concealed by the vendor the doctrine of caveat emptor does not apply. An example of this might be if the vendor patched the crack in the wall in order to hide a structural deficiency. In this case the purchaser can ask for rescission of the contract and\or compensation for damages.

After closing, the rights of the purchaser with respect to defects in quality are limited. As a purchaser your best protection comes from the express terms of the agreement of purchase and sale which should include the right to have an inspection done and to demand that deficiencies are either fixed or, if the vendor is unwilling to do this, you as the purchaser have the option of canceling the transaction.

Remember that every situation is different and this article deals only with generalities. If you are uncertain as to your rights in a certain situation you should consult your lawyer.

Bernie Jankowski practices real estate, corporate and estates law in Barrie, Ontario. If you have questions about this article or real estate law in general, write to That's The Law, c/o Toronto Sun, 333 King St. E., Toronto, M5A 3X5.

Email: bernie@bjankowski.com