Found Defects In Your New Resale Home? Know Your Rights

When purchasing a resale home—a home that was previously owned—you should have basic knowledge of legal remedies that may be available should you discover defects in your new home. Even if you opt for a home inspection, a resale home may still offer some surprises after closing. Home defects can be categorized as either patent or latent.

Patent Defects

Patent defects are visually observable defects, like foundation cracks, that can be discovered by someone exercising reasonable care in their inspection of a property. Generally, the rule of caveat emptor, or “buyer beware”, applies. Sellers are not required to disclose patent defects. Buyers who have observed patent defects can protect themselves in an agreement of purchase and sale, by negotiating for repairs before closing, a reduced purchase price, home inspection conditions, and contract termination.[1] Furthermore, a buyer may have a legal claim against a seller who tried to actively hide a patent defect.

Latent Defects

In contrast, latent defects, such as water damage, are not discoverable by reasonable inspection. A seller is required to disclose a latent defect if they are aware of it. A buyer may sue a former owner for latent defects if the former owner knew of the latent defect and attempted to conceal it. The buyer must commence a claim within two years of the day on which they discover the claim. To obtain damages for a latent defect, the purchaser must establish either that (1) the vendor was aware of the defect and concealed it or (2) it was known to the vendor and rendered the property uninhabitable, dangerous, or potentially dangerous.[2]

During the negotiation process, a buyer can insist on warranties in the agreement of purchase of sale. A buyer can also consider requesting that a seller complete a Seller Property Information Statement (“SPIS”), which asks questions about the condition of a home. A seller is, however, under no obligation to complete a SPIS. If a seller chooses to provide such information, that information must be full, complete, and accurate.

Nevertheless, buyers may have little room for negotiation in today’s hot real estate market, so they must be aware of their options for legal recourse should their home be found to have defects.

[1] See Giancola v. Dobrydnev, 2020 ONSC 6007 at para 26 (affirmed 2021 ONCA 793).

[2] Vieira v. Dawson, 2018 ONSC 413 at para 19.

This article is provided for information purposes only and does not constitute legal advice. For any questions or concerns, please contact Corestone Law at info@corestone.ca.