Fraser Law Professional Corporation

Real Estate, Wills and Estates, Corporate Law

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Do’s and Don’ts When Selling a Residential Home

Before the average Ontario or Oshawa, Whitby, Bowmanville or Durham homeowner sells their home there are some typical things that should happen prior to the sale. The home should be cleaned and minor repairs should be made. In some cases there will be some paint touch-ups and possibly larger repairs as conditions of an agreement of purchase and sale. For selling homeowners, there are some traps to watch out for:

Prior to listing their home for sale, homeowners need to be careful that they do not make the mistake of concealing a defect in the home. Defects can be patent or latent. For example, when sprucing up a basement it is important to not simply paint over areas where leaks have occurred in the past. From a legal point of view:

Swayze v. Robertson [2001] O.J. No. 968: A latent defect ….. is in effect some fault in the structure that is not readily apparent to an ordinary purchaser during a routine inspection. And ordinarily, if a vendor actively conceals a latent defect, the rule of caveat emptor (buyer beware) no longer applies and the purchaser is entitled, at their option, to ask for a rescission of the contract or compensation for damages.

Latent defects are not easy for the average homeowner to see whereas a patent defect is visible and reasonably easy to spot, such as water damage from a leaky basement or a large crack in the above ground foundation. In a previous Ontario case a seller was found liable for concealing a latent defect when he covered a structurally unsound, load bearing wall of his home with new siding. The seller had nailed the new siding into rotten material, concealing the defect. The seller was found liable by the court and was made to pay significant damages to the purchaser.

In other cases the responsibility to identify defects lies with the purchaser. The rule of caveat emptor (buyer beware), generally providing limited liability to the seller, applies where a patent defect is left in the open for the buyer to see. It is generally the purchaser’s responsibility to inspect the property being purchased. The homeowner and real estate agent need to be sure that no defects in the home, whether latent or patent, are actively concealed as this could lead to a serious damage award from a court following the sale of the home. In a nutshell, a court will look to see if there was an active misrepresentation by the seller as to the state of the property. While this is sometimes difficult to prove, if a buyer is successful in proving that a defect was intentionally hidden the court will often award damages in favor of the purchaser.

Beyond the serious fix ups and paint work that goes along with preparing a home for sale, homeowners need to keep in mind that the home needs to left in a clean state on closing day. Vacant possession is something the seller must provide on closing day. The rule for sellers should be: if an item is not listed to be left behind according the agreement of purchase and sale, then it should not be left in the home. Some real estate agents also insert a condition into agreements of purchase and sale that the property is to be left in a clean, broom-swept condition on closing. In the event the home is left in an unclean state on closing or rubbish is left behind a purchaser may bring an action against a seller in Small Claims Court.

On closing day the purchaser and seller will be notified by their respective lawyer by telephone once the deal has officially closed. Often the purchaser will attend at her lawyer’s office to pick up the keys at that point. When the seller’s lawyer notifies the seller by phone that the transaction has closed the seller must be fully moved out of the property. In the event the seller is not moved out the seller could face legal action from the purchaser for its losses, such as paying a moving company extra to wait while the sellers finish moving out. I advise seller clients that the best practice is to ensure that they are completely moved out of a property the day before closing.

Homeowners who are selling their property should always check with their lawyer or real estate agent if they are at all unsure as to their obligations both prior to listing their property for sale and as of the closing day. Thank-you for reading. Please contact the undersigned for further inquiries. We would ask that you consider our firm for any future real estate, wills and estates, or corporate law assistance you, your clients, or your family may require.

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