Is a seller accountable for problems you discover about a house you’ve purchased?
It’s been years since I’ve handled a case like that, so I had to do a little research to find the answer for a friend.
It didn’t take long to find a recent case on point, Nixon v. MacIver, 2016 BCCA 8 . Legal decisions can be difficult to understand, even for lawyers, so please do not rely on anything you think you understand from that case without consulting with a lawyer.
A house purchase is the biggest investment most of us will ever make. And we tend to stretch our financial limits when doing so. Expensive problems discovered after taking possession can be financially devastating.
Holding the seller accountable, if it is even possible, is a disaster in itself when you consider the legal expense and time required to do so.
You might have the seller dead to rights on misrepresenting the age of the roof. An excellent legal case. One that is very likely to succeed. But unlike cash that you can put towards a new roof, legal cases take time and legal expense to pursue.
And all you get at the end of a successful legal case is a judgment directing the seller to pay you money in compensation. It’s an unsecured “account receivable” that might never be paid.
So that leads to my key advice on this point: Don’t let it happen in the first place.
Don’t you dare purchase a home without first having it inspected by a qualified, thorough and insured home inspector.
And please don’t hire an inspector based on price. Doing so is about as sensible as shopping around for the cheapest babysitter for your children. An inspection is only as good as the inspector.
And you also don’t want to end up with a lawsuit against an inspector who misses something.
Is an inspection necessary with a brand new construction? Absolutely. Perhaps even more so.
There are other steps you can take to research a property before finalizing a deal that I don’t have off the top of my head. Consult with a real estate lawyer to learn more.
Taking these reasonable steps to independently learn about potential problems with a property fits exactly with the legal principle of “caveat emptor,” which in the words of the judge in the case I referred to: “…remains very much alive in the context of real estate transactions in BC” (paragraph 47 of the case).
Those Latin words translate to “buyer beware.”
The court specifically referred to property condition disclosure statements that purchasers so often rely on. A vendor must be honest when completing those statements, but the statements require only information within the vendor’s actual knowledge. And that knowledge does not have to be correct.
And while those statements appear to be comprehensive, covering any possible problem you could encounter with a home. They are not.
Using the roofing example, the statement asks, “Are you aware of any roof leakage or unrepaired roof damage?” A vendor could honestly answer “no” to that question even with full knowledge that the roof is on its last legs.
In the case I cited, the vendor’s disclosure that the home was only approximately six years old, even though it had been a cobbled together construction that included a much older cabin, was not sufficient to make the vendor accountable for problems that surfaced related to the age of the cabin.
Yes, a seller must be honest when answering the specific questions a property condition disclosure statement, but honest answers might well be wrong and the statement is far from comprehensive.
Apart from that, the seller of a home has no obligation to alert you to problems except in the very narrow circumstance where the seller knows about a defect that could not have been identified by a property inspector, and which would render the home dangerous or uninhabitable.
End up with a lemon house? Consult with a lawyer for advice specifically related to your situation. You might well have a persuadable claim.
But as is always is the case, the best lawsuit is no lawsuit at all. Take the words “buyer beware” seriously and don’t rely on anything you are told by a seller or the realtors involved.
Missing Paul’s last column? Read it here.