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Buyer beware by Melissa Roque, Scarfone Hawkins Law

The common Latin phrase “Caveat Emptor”, meaning “let the buyer beware” has a harsh reality in real estate law. As I often describe it to my clients, absent fraud or some other egregious act(s), the duty is on the purchaser to conduct thorough review or inspection of a property. A purchaser’s absence to heed this cautionary Latin phrase, may compromise the most valuable asset an individual purchases in his or her lifetime.

Ontario’s housing market has seen its ups and downs but with a modest interest rate, shortage of affordable housing, and the first time home buyer incentive from the federal government clearing obstacles for new buyers, it is probable that purchasers will be required to be more competitive with their offers in the coming months. As a result, it is probable that we may see an influx of offers to purchase used residential property, without any conditions. While it is typical to include in any offer to purchase, conditions on obtaining third-party financing and closing dates, with respect to the state of the property, a diligent purchaser will want to include the condition of inspection. This triggers the Latin phrase and legal doctrine Caveat Emptor.   

Imagine this scenario, you have just closed on the purchase of your first residential property. You emptied your bank account for the deposit. You have secured a mortgage, which you will be paying for most of your adult life. You unpack, settle in and bask in your accomplishment of becoming a home owner only to discover that your heating pump does not work. After hours of searching on Google for the possible issue, you arrive at the conclusion that you have a defective heating pump.

Your first reaction may be to call your real estate lawyer to try and make a claim against the prior owners as they did not disclose the defect. Unfortunately, the doctrine of Caveat Emptor means that a buyer who does not protect her or himself by inspection or contract is without a remedy. Of course with most things in law, there are exceptions, however the take away here is that if a defect in your home would have been discoverable upon inspection or inquiry, then the buyer will have no claim against the prior owners and the doctrine of Caveat Emptor applies.

Buyers should be told the meaning of Caveat Emptor prior to signing any unconditional offer to purchase a home. Unfortunately, this is very far from the case. Buying a home is the biggest investment most of us will make. I empathize with the eagerness of first time home buyers. Like them, I didn’t want to see any warts when I finally found the perfect home for me. But then I remembered that damn Latin phrase and called a building inspector to check-out my not so perfect home. I’m glad I did and you will be too.

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