A recent client of mine purchased a house and was extremely happy with the transaction. After moving in, she found cracks in the foundation and evidence of water intrusion that had been deliberately covered up by the seller. She had hired an inspector and signed off the usual real estate purchase contract agreeing that she
accepted the home “as is.” Does she have a claim for this hidden defect?
A recent Ontario case answers this question. This case supports the longstanding law in this area. In the Ontario case, Mr. Gauld had owned his home since 1966. In 1996, he sold the home to the plaintiffs. The plaintiff had inspected the home before making her offer to purchase and visited the home twice before deciding to buy. During those
visits she had specifically asked whether there had been any water problems in the
basement and was assured there had been none. After moving in, she discovered
holes had been drilled in the concrete foundation of the basement. These holes were specifically drilled to allow floodwater to drain out of the basement. They had been installed in recent years and were a costly renovation. They would only have been done by someone who had flooding problems.
To avoid future flooding, the plaintiff renovated the basement walls to seal them at a cost of $10,400. At trial, she was awarded $20,482 to cover her expenses plus interest and costs.
In reviewing this matter, the Court pointed out that even where an inspection has
been done and the purchaser agrees to accept the home “as is”, this does not relieve liability where there is a hidden or latent defect. Where the defect cannot be discovered by ordinary inspection or the seller deliberately misrepresents the state of repair, the seller is liable. In cases where the Court determines the misrepresentation was fraudulent, the Court will typically award extra Court costs.
Reprinted with permission from:
Stan Galbraith, Galbraith Law
Making the Law Work for You
www.galbraith.ab.ca