Water Damage Clause

Question:

[Warranty Clause question]

Purchaser’s lawyer wants to change a warranty clause to the following:

“The Seller represents and warrants that, to the best of the Seller’s knowledge, the premises have not suffered any prior water damage. The Parties agree that this representation and warranty shall survive and not merge on completion of this transaction.” Does this not make Seller responsible indefinitely?

I can’t see how Seller will go for this, especially since my purchaser / client is getting a very good price for this property.

Answer:

This is not a particularly good clause. Is there evidence of water damage somewhere now?

The restriction to the “Sellers knowledge” makes the clause essentially worthless.

Who cares what the Seller knows! This is very limiting. The warranty would continue afterwards but this warranty relates only to the Seller’s thinking!

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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