Caveat Emptor–noun-let the buyer beware: the principle that the seller of a product cannot be held responsible for its quality unless it is guaranteed in a warranty.
You may have heard the Latin term Caveat Emptor before and have likely heard its English translation, the term buyer beware. The statement though seemingly simplistic is a fairly accurate statement of the law in Ontario when it comes to buying real estate property in Ontario.
When you buy a home you are buying all of the issues with that home whether structural, stylistic or regulatory. If you buy a home and discover after the fact that there is a leak in the foundation, that leak is your problem, not that of the seller. If the septic system in your home all of the sudden backs up and the basement is flooded, it’s more than likely that that is an issue that you are responsible for.
The exception to the rule of Caveat Emptor is where a seller either fraudulently or negligently misrepresents the condition of the property. This means that where the seller is aware of a leak in the basement or in the roof, or some other defect that would not be seen by a reasonably thorough inspection of the home prior to the sale they have a duty to disclose these facts to potential buyers.
The Ontario Real Estate Association has done an excellent job of providing simple forms for a seller to fill out that provide statements about the seller’s knowledge of issues with the property.
Despite the duty to disclose, it can be very difficult to prove that a seller had knowledge of the defect prior to the new buyer discovering it after they purchase. The usual course of action when you believe that a seller has withheld information from you regarding the home that you have recently purchased is litigation in small claims court.
This article is not written to scare potential home buyers, but to inform them of the realty of purchasing a home. To minimize your risk, purchase your home from a seller that is using a reputable real estate agent. An agent will make the home seller aware of their legal obligations with regards to disclosure and will aid in the seller providing all relevant information about the property.
Use a competent and professional real estate agent. Your agent should help you assess your risk and minimize it by thoroughly reviewing the property disclosure statement and suggesting including a clause in the Agreement of purchase and sale be conditional upon the buyer receiving a satisfactory home inspection. Your agent and a competent home inspector will help you assess and minimize your risk of finding defects in the home after you purchase the property.
The agreement is usually binding before you ever get to your lawyer’s office; therefore, you should make sure that you work with competent professionals to help you make this very important decision.
