Make sure home seller’s promises are met before closing
Court decision emphasizes it’s the house buyer, not theseller, who is most at risk.
A buyer had been under the impression that the seller wouldtake care of repairing the home’s furnace. (Dreamstime)
By Bob AaronPropertylaw
Sat., Oct. 8, 2016
A small claims court decision released last year underscoresthe importance of careful wording of seller promises in agreements of purchaseand sale.
Back in March, 2014, Tracey Lynn Robinson bought a house inMilton, Ont., from Caroline Anne Hobbs-Lingard. In the purchase agreement, theseller promised that the fixtures and movable items (chattels) being purchasedwould be in good working order on completion.
In a second warranty in the agreement, the seller alsopromised that the swimming pool and equipment would be in good working order oncompletion of the deal.
Robinson hired a home inspector to examine the house beforethe purchase agreement became binding.
The closing took place on May 30, 2014 Robinson tookpossession on June 6 and two days later a Union Gas representative showed up toinspect the furnace — required as a condition of turning on gas service to thehome. He “red-tagged” the furnace, and issued an order requiring replacement ofthe rusted and corroded venting liner and sleeve. A heating contractor lateradvised the new owner that the heat exchanger in the furnace was defective andhad to be replaced.
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Photographs taken the following month when a new furnace wasinstalled showed rot and rust inside the old one.
Ten days after closing, a pool contractor came to the houseand advised that the pool pump and solar auto controller were not working andrequired replacement at a cost of $1,778.
Robinson sued Hobbs-Lingard in small claims court for atotal of $6,016 for the cost of a new furnace and pool repairs.
The trial was held before deputy judge Kenneth Kelertas lastyear. In finding against the buyer, the deputy judge ruled that the warrantyexpired on the closing date of May 30, 2014, and that it was up to the buyer todetermine whether or not the pool equipment and furnace were working beforeclosing — not after.
In my view, the court’s decision is wrong. It was obviousfrom a post-closing examination of the pool equipment and furnace that they hadbeen inoperable for some time before the closing.
But, in the court’s opinion, the only issue was whether theitems were working on closing.
“When representations and warranties of this sort aregiven,” the judge wrote in his decision, “purchasers should inspect theproperty just before closing to ensure that the vendor’s warranties are true.
“Otherwise, if the purchaser discovers a problem withrespect to a warranted fixture, chattel, or the state of the property afterclosing and they do not have proof . . . that the problem existed at the timeof closing, they will not succeed in a claim for breach of warranty . . . ”
Lessons from the case:
Purchase agreements should always provide for an inspectionjust before closing to ensure all promises are met.
Warranties should be very carefully drafted to ensure thatany deficiencies in the warranted appliances or fixtures can be dealt withbefore closing.
Agreements can provide for a cash holdback to cover repairsif defects are found during the pre-closing inspection.
Bob Aaron is a Toronto real estate lawyer. He can be reachedat firstname.lastname@example.org , on his website aaron.ca,and Twitter @bobaaron2.