What would you do, if you received an Offer with this Warranty?

Well and Water Warranties – Travers Tidbits

Question:

You are the Listing agent. What would you do, if you received an Offer with this Warranty? How would you advise your client?

“The Seller warrants that, to the best of his knowledge and belief, the property does not contain any hidden defects including but not limited to: mould contaminations, water seepage, Kitec piping or urea formaldehyde insulation.

Further, the seller warrants that, to the best of his knowledge and belief, there have been no suicides or murders on the property at any time and that no part of the property has been used for any illegal or criminal activity, including but not limited to a grow house operation.

These warranties shall survive the closing of the transaction but shall only apply to circumstances existing at or before closing date.”

Answer:

The warranties proposed are not that serious, but you need to go over them with the Seller. There are three separate issues: 1) hidden defects, 2) deaths, and 3) grow houses.

The first is not difficult. Essentially, that’s the law anyways. If there is a hidden defect that you know about, you have to tell. However, it would have to be important enough to qualify as having some significance. If not, it would not meet the minimum disclosure threshold, yet this clause would require disclosure.

There is a general statement about deaths. It is not restricted to the Seller’s period of ownership. It is quite reasonably argued that for prior periods, the Seller is placed upon inquiry, meaning that the Seller should ask some questions, make some inquiries etc. in order to offer something of a Warranty. It would not be enough to simply say: “I don’t know and I don’t care!” That’s not the intention of a “best efforts” warranty.

The third provision is vague. Crimes can be committed over the internet. Is that included here? The illegal use of a phone, computer or a room might be included here. Specific mention is made of a grow house. That’s significant, that’s material, and that will affect mortgaging the property and the price. There’s a stigma even if there is no damage.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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