Home inspections are your best friend: Property Law
When a home inspection is waived prior to purchasing ahouse, it is very difficult to win a lawsuit down the line.
If you choose to skip a home inspection, make sure to haveyour lawyer draw up warranties on the condition of the property, says BobAaron. (Dreamstime)
By Bob AaronPropertylaw
Sat., Dec. 17, 2016
What happens if you discover water flowing below the floorin a newly-purchased house and you have to completely gut the basement toremove toxic mould? Who is responsible?
That was the problem facing Eric Brown and his mother,Louise, after they bought a house on MacHenry St. in Forest, Ont., from Garyand Kim Cassidy in October 2011.
During his first inspection of the house, Eric asked Gary ifhe had ever had any water problems in the basement and was told “no.” Garylater told Eric that there had been a water problem in the basement in 2002,but it had been fixed.
The Browns decided not to have a home inspection because themale buyer and seller were both members of the Freemason’s fraternity and“could trust each other.”
Although it was important to the Browns that the propertyhad not had any water problems, the offer which was drawn up by their lawyermade no mention of that issue.
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After closing, the Browns hired a carpenter to paint thehouse and do basement repairs. The carpenter discovered that the basementcarpet was wet. Water was flowing under the floor, the floor strapping wascompletely black with mould, and there was no vapour barrier between theconcrete and the strapping.
There was also mould on the baseboards and in the basementdrywall, all of which had to be removed.
Mould spores were discovered in the ceiling and on the wallsof the fireplace.
Water damage was discovered in the basement bathroom and inthe stairs. Electrical wires in contact with heating vents and water pipespresented a serious danger and had to be repaired.
Mould was also discovered in four locations upstairs.
Eventually, the Browns sued the Cassidys for repair costs of$85,000 calculated at the modest rate of $15 an hour paid to their carpenter.The damages amounted to almost half of the $167,500 purchase price of the house.The buyers’ claim to the courts was based on fraudulent misrepresentation andconcealing of a dangerous hidden defect.
The law in this area is caveat emptor: buyer beware. Ifthere are no representations or warranties in a purchase agreement, a seller isnot liable in damages to a buyer, but there are exceptions:
Where the seller fraudulently misrepresents or conceals anissue;
Where the seller knows of a hidden defect which makes thehouse unfit for habitation, and fails to disclose it to the buyer;
Where the seller is reckless about statements made relatingto the fitness of the house for habitation.
After a four-day trial last April, Justice Russell Raikesthrew out the buyers’ claim. He ruled that they had not inserted anycontractual protections in the offer. “I find,” he wrote, “that the Cassidyswere ignorant of the water drainage/leakage and mould contamination issuesanywhere in or around the house.” He added that “this is not a case ofconcealment.
“(The Cassidys) saw nothing that led them to understand theproblem was recurring, nor was there anything that should have led them to thatconclusion.”
Not only did the Browns lose the case, but they had to paytheir lawyer as well as a portion of the defendants’ legal bill.
The lessons to be learned from this sad case are:
Rule 1: Always insert a home inspection condition in anoffer to purchase;
Rule 2: If you ignore Rule 1, insert representations andwarranties in the agreement about the condition of the property;
Rule 3: if you ignore Rules 1 and 2, don’t expect to becompensated for any problems you discover after closing.
Bob Aaron is a Toronto real-estate lawyer. He can be reachedat email@example.com , on his website aaron.ca andon Twitter @bobaaron2.