Sellers Avoid Lawsuits: Factor Defect into Price!

Everyone wants to negotiate and get a good price for their house. But, when the deal is closed and the sellers have moved on, they really want to be DONE with the house.

So, what’s the point in concealing a defect?

It just may come back to haunt them, even after the deal has closed.

The sale of houses without new home warranties is subject to the doctrine of caveat emptor, “let the buyer beware”. It’s essentially the buyer’s responsibility to protect himself. This he does by:

  1. Specific warranties and representations in the contract, and
  2. Investigation, tests, examinations by qualified experts.

If he fails to do either, he is left without remedy.

If there is a significant defect found after the closing, the buyer is going to be upset. If there is enough money at stake, then there is likely to be a lawsuit.

What does the vendor actually have to disclose?

The law imposes liability upon a vendor (with knowledge) for failure to disclose material latent defects which are known to the vendor and:

  1. Render the premises structurally unsound, or
  2. Render the premises unfit for human habitation.

While it may be tough to prove, certainly, if the claim is sufficiently high then there is likely to be a lawsuit.

What’s the absolutely, very best defence against this lawsuit?

DISCLOSURE: the buyer knew about the defect and accepted the risk. The property including the defect was factored into the price!

If the vendor can prove that the buyer KNEW, then the vendor will be successful in the defence.

Brian Madigan LL.B., Broker

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