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Purchasing a Home and Caveat Emptor: Why Residential Real Estate Buyers need to obtain a Home Inspection

Posted on 12 February, 2019 at 0:00

By Daniel Greanya:

One area of law that my office represents people in is in the area of legal disputes related to residential real estate transactions (not the transactions themselves, only lawyers can do that). Usually these matters come to my attention only where the sale falls through for some reason or there is a dispute over the transaction or the property. Residential Real estate transactions are the most important transaction a family will make, and it is very important that care is taken to protect the family’s interest.


It has become common in real estate transactions for a salesperson to suggest waiver of any inspections or conditions to enable clients to get the house. This is a very bad practice for both the real estate salesperson and the homebuyer.


With very few exceptions, residential real estate law in Canada is one of the last bastions of the principle of caveat emptor. This latin term literally means “let the buyer beware”, and stands for the concept that a buyer must satisfy themselves as to the quality and or suitability of the product or service that they are purchasing prior to purchase. The seller may not act deceitfully to hide important information from the buyer, but the buyer is responsible to make sure that they are making a sound purchase.


A purchaser protects themselves under caveat emptor two ways, first by placing warranties (promises by the seller that the home will be in a specific condition, and that they will be responsible if it is not) in the Agreement of Purchase and Sale, and second by attaining a home inspection. Now, a home inspector is only going to report on things that are visible upon inspection, not all things that are wrong with the property, nevertheless an inspection is very important. Outside of discovery of a problem in a home inspection, a buyer generally has no claim against the seller unless they can prove that the problem is one that the buyer could not have discovered upon proper inspection, that seller knew about the problem and that the seller concealed it. If the buyer could have discovered the problem by reasonable inspection and chose not to do so, the seller will not be responsible.


Of course if the seller is not responsible, and the buyer has not inspected, the problem is now the buyers’ problem. This applies even where the buyer would not have purchased the property if they would have known. Often the buyer who thought that they were purchasing a home without problems finds out that they now have a bill for tens of thousands of dollars that they did not budget for, and did not know about, and they are responsible for a home that they would not have bought had they known about the problem. There is no recourse against the seller, so the only option a purchaser has is to absorb the cost themselves or take action against the real estate agent. This brings us to why this is a problem for salespersons.


A real estate agent has a legal and professional duty to properly advise their client and to act in their client’s best interest. After all, that is why the client has hired the real estate agent in the first place. In the scenario where a significant problem is discovered and the agent has not attained an inspection, a real estate agent can be sued for breaching their contractual and fiduciary obligation to the client, and can be on the hook for some or all of the purchaser’s costs.


While it may seem expedient to dispense with an inspection, it is very important for agents to advise that an inspection be completed and for purchasers to demand an inspection. This will help both parties ensure that the transaction is one in which the purchaser is going to be happy with, and prevent unnecessary cost and aggravation later.


DISCLAIMER: This article is intended as general information, and does not replace the advice of a Licenced Paralegal or Lawyer. For advice on your specific case, contact Greanya Legal Services directly.

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