Croft v. Prendergast, 1949 CanLII 121 (ON CA)
The case concerned the purchase of a house that was still under construction. The purchaser inspected the house before signing the agreement and subsequently completed the purchase, paid the balance, accepted the deed and took possession.
After moving in, however, he discovered serious construction defects, particularly problems with the foundation, waterproofing and weeping tiles.
The agreement expressly provided:
“The Vendor agrees that the house and grounds will be completed in a workmanlike manner.”
The vendor argued that the purchaser’s inspection, completion of the transaction and acceptance of the deed brought the matter to an end, relying on caveat emptor and Redican v. Nesbitt.
The Court of Appeal rejected that argument. It held that the contractual warranty applied not only to work that remained to be done after the agreement, but also to defective work that had already been completed before the agreement was signed.
The Court emphasized that the vendor had undertaken two separate obligations:
- To convey the property to the purchaser; and
- To complete the house in a workmanlike manner.
Completion of the sale and acceptance of the deed did not prevent the purchaser from enforcing the separate contractual obligation concerning the quality of the construction.
The Court also held that, even if the express warranty were interpreted narrowly as applying only to future work, there could still be an implied warranty regarding the previously completed work.
The purchaser was awarded $1,300.50 in damages, representing the cost of correcting the defects and the resulting damage. After setting off the vendor’s $500 claim for the deposit cheque, the purchaser received a net judgment of $800.50.
Croft v. Prendergast establishes that where an agreement for the sale of a house under construction contains a warranty that the house will be completed in a workmanlike manner, that warranty may extend to defective construction already completed before the agreement. The purchaser’s inspection and subsequent closing do not necessarily waive the contractual warranty.
This is particularly important for real estate transactions because an inspection of the property does not necessarily eliminate contractual rights arising from an express warranty in the Agreement of Purchase and Sale.
Brian Madigan LL.B., Broker
www.OntarioRealEstateSource.com