Caveat Emptor – Buying A Toronto House Without A Home Inspection

A home inspection in Toronto typically costs between $300-450 dollars.  It’s a small price to pay for the peace of mind you’ll get as a buyer.   The renovations necessary after unknowingly purchasing a home that has severe mould issues, broken furnace, leaky roof or shoddy foundation can run into the tens of thousands of dollars.

When buying a Toronto resale home, it is imperative that a home inspection is conducted. A home inspection can also benefit the home seller by protecting them from legal troubles down the road.  Remember though – don’t hire your cousin Fred – he doesn’t have errors and omissions insurance to protect you in case the inspector misses something!

Latent Defects Versus Patent Defects

Avoid Buying A Home With Foundation Issues - They're Typically Too Costly To Remedy

In Canada, property disclosure laws are fairly relaxed, and they definitely stress the age old saying “buyer beware”. To understand more about this, we need to realize the difference between patent and latent defects. 

A patent defect is something that is obvious to the naked eye. This includes mould that is seen when touring a home, things that are clearly broken and visible imperfections. A latent defect is something you cannot see, such as a basement that has a tendency to flood, a leaky roof or hidden mould that lies in wait behind walls or under the carpet.

A seller does not have to mention anything about patent defects as you should be able to see them for yourself. A buyer can, however, include a clause in the closing agreement that it must be fixed – if the buyer indeed catches it in time.

A seller who knows of a dangerous latent defect can find themselves in serious legal trouble if they fail to disclose them to the buyer. “Dangerous” means that the defect presents a serious safety hazard or the home is rendered unlivable. Other latent defects that are less serious to personal health should still be disclosed, like flood issues.

Psychological Defects

Many home buyers and sellers wonder if one needs to disclose if something traumatic occurred within the home, such as a murder or a suicide. These properties are referred to as “stigmatized properties” and these occurrences are called psychological defects and they do not have to be disclosed as they have little bearing on the functionality of a home. Meaning, if there was a murder within the home, the likelihood that the home would experience another one is very small and this poses no danger to the buyer.

On the other hand, a famous story in a USA Law Journal published a case where the sellers had publicized their house as being haunted and when the buyers discovered their house did in fact appear to be haunted, they won their deposit back. According to the state Supreme Court, the house was legally haunted because the sellers said so.

Regardless, most savvy homeowners will research a neighbourhood before buying, and they will likely find out about anything unsavory beforehand anyway. Neighbours might also inform them that they live in “the murder house” as neighbourhood lore can become legendary after enough time passes.

Seller’s Property Information Statements

A Seller’s Property Information Statement (SPIS) can be filled out, but is not offered as a guarantee to the buyer. They are normally completed to the best of the seller’s ability and knowledge to inform the buyer of any problems that might exist with the home. If a problem isn’t visible or known to the seller, there is very little recourse later on for the buyer.

The law tends to treat these instances on a case-by-case basis. If it can be proved the seller knew about latent defects at the point of sale, they can be sued. But if the seller discloses issues with latent defects, such as a leaky basement that turns out to be an issue much more frustrating than the buyer originally thought, the seller might be free and clear for having provided proper disclosure.

In Toronto when we’re representing a buyer, we always include a request in the offer for the seller to provide us with an SPIS.  But I can say that in about 99% of accepted offers the seller will strike out the clause and not provide it.  Why?  In their opinion there’s too much liability and the seller’s lawyer will say “Get a home inspection”.

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