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Disclose problems you know about when selling your home

By Mark Weisleder

Buyer beware, or Caveat Emptor, is a phrase used to describe the outcome when you buy something and later find a problem with it. In plain English it means tough luck – you’re buying the thing ‘as is’ with all the defects in it.

In some cases involving the purchase of a house, it’s not as easy as that for a seller to get off the hook. If you know there’s something seriously wrong with your house, something that might not be found in a home inspection and you don’t disclose it, you can be successfully sued later.

Here’s why:

In October, 2011, Buyers A and B agreed to buy a 35-year-old home from Sellers C and D. The buying couple had a home inspection done before they put in an offer and the inspection found no sign of plumbing drainage problems.

The deal closed in mid-December. Two months later on Feb. 20, Buyer A found sewage backing up into the basement bathtub and sink. Roto-Rooter cleared the drain, but could not get past a certain point in the pipe. A TV scope showed water pooling inside the pipe. A quote of $6,000 plus HST was given to repair the problem.

Mr. A contacted his insurance company and the work took longer to do and cost more because the basement had 36 inches of concrete. The buyers had to move out while the repairs were being done because of the dust and noise from the jack hammering. Also Buyer B was pregnant at that time. The insurance company paid for them to stay in a hotel while the repairs were completed.

Buyers A and B contacted their Region and learned that they had been out to the property twice in 2010 to inspect and clean out blockages from the same sewage line. The Region had sent a letter to Sellers C and D after the second visit in July, 2010 suggesting other repairs be done.

Buyers A and B sued for $14,945, which were the additional costs not covered by their insurance to repair the problem. They asked for $5,000 more in aggravated damages, because they had to move out and have their baby while outside the home.

Mr. C admitted in court that he had a problem with the basement bathroom but that after the Region came out and cleared the blocked area, they told him that if he had no further problems for six months, he would be good to go. He also said in court that the basement bathroom was used every day and did not have any problems from July 2010, until the sale in 2011. He stated in court that he did not mention this to the buyers because he felt that this was no longer a problem.

In a decision released this month, the Judge at the Small Claims Court used the law of hidden defects to reach his decision. He said that if the seller knows about a defect that has caused any loss of use or enjoyment of a meaningful part of the premises, then it must be disclosed to the buyer. The Region inspectors testified that they discussed the potential sewer pipe problem with Seller C.

This. together with the letter, convinced the Judge that Seller C. knew about a structural problem with the pipe which should have been disclosed.

He awarded the buyers $10,500 for the repairs to the pipes but nothing for aggravated damages as the sellers did not do this with any ill motive and there was no evidence of mental distress.
The buyers were fortunate to have uncovered the evidence from the Region to support their position. Without it, it would have been difficult to prove that the sellers knew anything about this.

Here are lessons:

• Buyers may be wise to consider a separate test for the drainage system as part of any home inspection with older homes, even if this costs an extra $200 to $300.
• Sellers should disclose any structural problems to avoid getting sued later.

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