Buying a Property & Caveat Emptor in Ontario

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Ali Ahmari Moghaddam /
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Buying a Property & Caveat Emptor – Buyer Beware!

Caveat emptor, a famous Latin phrase and important legal concept that vendors and purchasers should be aware of when buying or selling a property. This Latin maxim means let the buyer beware, and the doctrine states that a purchaser has the responsibility to conduct investigations and inspections of the item being purchased to reveal any issues or defects that a reasonable person would have discovered through an inspection or investigation. This is a very important principle and is especially relevant in real estate transactions. The general rule in the province of Ontario is that a reasonable person should conduct their own due diligence, inspection, investigation and research to not only ensure the property is right for them, but also to ensure that the property does not have any defects, issues, or stigma, attached to the property.

Patent vs Latent Defects

Patent defects are those that are reasonably discoverable by the purchaser, if the purchaser conducts their due diligence and investigates the property. The onus is on the purchaser to confrim the status of the property through its investigation, such as conducting a professional home inspection of the property.. Under this theory, the seller has no obligation to disclose any patent defects that are reasonably discoverable by a Purchaser. These are considered defects that would be extremely evident to anyone who performedinvestigations, inspections and due diligence searches on the property. Patent defects can arise specifically where there is a real estate transaction, and the agreement of purchase and sale has no conditions and is a firm and binding agreement. In this scenario the buyer will be required to go through with this purchase, as they have waived the right to place any conditions on the transaction, such as a satisfactory home inspection condition. The purchaser has bascially accepted the property with any patent defects that may exist. Patent defects are often not a valid reason to invalidate an agreement of purchase and sale, unless specified in the contract that it is conditional on that defect.

However, latent defects are those that are not easily or reasonably discoverable by a purchaser, and as such, the vendor has a duty to disclose those defects to a potential purchaser. For example, the vendor of a property is aware of the existence of some sort of black mold , but does not disclose it’s existence or actively tries to conceal the black mold from a potential purchaser of the property. . Often this does not become an issue with newer homes, but definitely can cause problems with older properties. Newer properties often also are covered under new home warranties, but nevertheless due diligence must be completed to ensure the home is up to standard of living and that there are no defects existing. However, there are certain limitations to these new home warrantiesIn Ontario, the limitation period for bringing a an action regarding a latent defect is two years from when you discovered the defect, or ought to have discovered it.

Remedies for Defects

Patent defects are apparent and visible to a reasonable person. Latent defects however require more of a detailed inspection, and can be concealed. Damages can be sought for latent defects as long as it can be proven that there was actual knowledge regarding the defect, and attempts at concealment of the defect.

Conclusion

This is why it is important to ask the right questions when purchasing real estate, and to do your research and due dilligence. Conduct proper inspections of a property with the help of qualified inspectors. Hire the right professionals to assist you, such as your real estate agent and retaining a lawyer to conduct proper searches prior to closing. It is also essential when selling a property, to know your obligations and rights for disclosing defects and any other important information regarding the property to avoid future legal troubles.