Be diligent, vigilant when buying a home

Joyce Blond Frank

March, 2010

You’ve decided to purchase a house and you’ve been told that “buyer beware” does not apply in Quebec. The price is right, you love the house, and you sign the deed of purchase. Sometime later, you notice water in the basement, or moisture around the windows, or a strange colour around the baseboards, or a smell that’s not right. You call in an expert and are appalled to discover the repairs required to correct these problems will cost a substantial amount. Are these problems latent defects? Did they exist at the time of purchase? What is to be done?

Before that question can be answered, it is necessary to know whether you have carried out your obligations as a buyer. A buyer must be diligent and prudent. He has an obligation to inform himself regarding all aspects of the purchase, to verify any fact that arouses suspicion and to advise the seller of any problems relating to the property that can be presumed to have existed at the time of purchase.

Where a buyer has failed to inform himself, any legal action against the seller will be rejected by the courts. This is what happened when a buyer purchased what he thought was a triplex from which he hoped to obtain revenue, and then discovered it was only a duplex. The listing for the property stipulated three lodgings and indicated the revenue to be expected. Also, prior to signing the deed of sale he was given a copy of the school tax bill indicating the existence of three lodgings as well as copies of three leases. However, a counter-offer made by the seller contained a statement that the property was zoned for duplexes and the property was described as a duplex in the contract of sale. The court found that in failing to verify the discrepancies with the municipality, the buyer had failed to exercise his obligation to inform himself and his action was rejected.

Where there are suspicious signs of a possible latent defect, a purchaser has an obligation to verify whether or not his suspicions are justified. So where there had been visible bits of tire and scrap iron around a property prior to the sale, the court held that a prudent and diligent buyer should have suspected the possibility of a latent defect and investigated further to learn whether those suspicions were valid. By not doing so, he had not acted as a prudent and diligent purchaser. Consequently, when he found debris consisting of automobile parts buried under shrubbery after he had taken possession, the court considered the defect to be apparent, not latent, and his action against the seller was rejected.

Hiring an expert is not a legal obligation, nor is it a required prerequisite for a diligent examination of a property by a prospective purchaser. This does not mean that he can close his eyes to a problem or to the possibility of a problem that would be noticed by a conscientious purchaser. Defects that are on walls, hidden behind shelving or behind the furnace might not be detected in a pre-purchase inspection. A prospective purchaser is not expected to open walls or floors. A court will assess all the facts in deciding whether a purchaser has exercised the required degree of prudence and diligence. The extent and degree of inspection that will be judged necessary will vary with such factors as the age and history of the property and, in some cases, the representations of the seller. Each case will be looked at individually. So even if it is not obligatory to do so, it is always a good idea to have a proper inspection done by an expert before buying a property.

Many defects are discovered only after the buyer has occupied the premises. The buyer has an obligation to inform the seller in writing within a reasonable time so that the seller can himself inspect the nature and extent of the defect and arrange for repairs at the best available cost. Failure to advise the seller of defects prior to effecting repairs will be fatal to legal pursuit of a seller as it deprives the latter of the possibility of ascertaining the nature and extent of the defects and of remedying them himself. It is to be noted that a professional seller – someone who sells property as a business – is presumed to know of the existence of any defects existing at the time of sale and therefore cannot invoke the delay to notify as a defence. Furthermore, the burden will be on the professional seller to establish that the defect did not exist at the time of the sale.

There are situations where a deed of sale will contain a clause that excludes the seller’s legal warranty. This often occurs where the owner has died and the heirs are selling and are not aware of defects that might exist. When a clause is put into a deed of sale limiting the seller’s warranty, the buyer will have no recourse should latent defects manifest themselves later on. However, should the seller deliberately mislead the buyer, he may lose the benefit of that warranty exclusion clause. This is what happened where the land on which the building sat was found to be contaminated. The seller knew but failed to advise the purchaser. The court held there was no valid consent to the purchase contract as the seller’s failure to tell amounted to fraud and fraud vitiates consent. So we see that even where warranty is excluded, the courts may invoke the ordinary rules of contract and protect a buyer from deliberate deception.

Most purchasers make an offer conditional upon inspection. It is the wise thing to do. Be diligent, be vigilant, be prudent, ask questions, verify answers and read the deed of purchase carefully before signing.