Listing Agent: Pre-Listing Inspection Liability

(Ontario)

Question:

Is there any risk to a Listing Agent who suggests or recommends a Pre-Listing Home Inspection?

Answer:

The actual risk to the Listing Agent should they recommend a pre-listing inspection is that the Home Inspector finds something significant. Assuming that the item found is a “latent defect” which the Seller didn’t know about, now it has to be disclosed. The Seller now has to tell every prospective Buyer. The Seller can’t simply ignore the issue and trash the Report.

One of the reasons for having the pre-inspection is to provide the prospective buyers with the impression that there is nothing to hide. So, get a well-known Home Inspector. Have the Report transferrable to the Buyer at a subscription cost, usually $100.00. Ensure that caveat emptor continues to apply in the APS.

The “safe way” of receiving the Report in the first place is to have it go directly to the Seller’s solicitor. They read it, and if there’s something bad, then the Report doesn’t get passed on. Also, the Seller is never advised about the Latent defect. That being the case, then the Seller doesn’t have to disclose it. The solicitor is subject to “Solicitor-Client Privilege” and cannot reveal this information to anyone else.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

Comments 1

  1. Interesting – first time hearing of a “subscription” cost. Typically the inspection report states that it is NOT transferable and provides an understanding that the report is for the inspector’s client. One of the downsides of the pre-listing inspection is if the house/property has significant defects, it may be possible for the report to simply disappear.

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