Seller Beware!

Full Disclosure is Important when Selling your Bracebridge Home.

Seller Beware- Full Disclosure when selling - Karen Acton Royal LePage Lakes of MuskokaUntil the early 1990’s Caveat Emptor or “Buyer Beware” was a phrase used to describe the risk taken when buying a home. In plain English it meant tough luck if you had an issue after closing! So if the  Buyer had a problem with the home that they did not discover prior to closing, they had to deal with it, with little or no chance of any compensation, from the Seller or the Realtors involved. The Realtor thought to be “working” for the Buyer, was in fact, working for the Seller and was not obligated to give advice to the Buyer, even though the Buyer may have believed that they were being represented.

Fortunately, things are very different now. It is mandatory for Realtors to give a full explanation of the types of representation available to their prospective clients and who is being represented by which Realtor in any transaction. A Buyer can choose to be represented and receive advice that they can rely on to help them complete their due diligence when purchasing a property.

This also means that for Sellers, full disclosure of all known defects of the property is vitally important. It will assist your listing Realtor in marketing and it provides a potential Buyer and their Realtor with readily available answers about the property, thereby instilling them with confidence that they know everything they need to make an informed decision.

As a Seller there is an obligation to disclose not only the obvious “visible” issues that a buyer and their Realtor will be able to see, or the less obvious ones a home inspector should find, but also any “hidden” ones of which you are aware.

According to an article by Mark Weisleder a prominent real estate lawyer and regular Toronto Star writer.

“If you know there’s something seriously wrong with your house, something that might not be found in a home inspection and you don’t disclose it, you can be successfully sued later.”

Here’s why:

In October, 2011, Jason Pedlar and Mary Kalbfleisch agreed to buy a 35-year-old home in Caledon from Daniel McDevitt and Elizabeth Jakobczak. The couple had a home inspection done before they put in an offer, and the inspection found no sign of plumbing drainage problems.

The deal closed in mid-December. Two months later on Feb. 20, Pedlar found sewage backing up into the basement bathtub and sink. Roto Rooter cleared the drain, but could not get past a certain point in the pipe. A TV scope showed water pooling inside the pipe. A quote of $6,000 plus HST was given to repair the problem.

Pedlar contacted his insurance company and the work took longer to do and cost more because the basement had 36 inches of concrete. The buyers had to move out while the repairs were being done because of the dust and noise from the jack hammering. Ms. Kalbfleisch was also pregnant. The insurance company paid for them to stay in a hotel while the repairs were completed.

Pedlar contacted the Region of Peel and learned they had been out to the property twice in 2010 to inspect and clean out blockage from the same sewage line. The Region sent a letter to McDevitt after the second visit in July, 2010 suggesting other repairs be done.

Pedlar and Kalbfleisch sued for $14,945, which were the additional costs not covered by their insurance to repair the problem. They asked for $5,000 more in aggravated damages, because they had to move out and have their baby while outside the home. 

McDevitt admitted in court that he had a problem with the basement bathroom but that after the Region came out and cleared the blocked area, they told him that if he had no further problems for six months, he would be good to go.

McDevitt also said in court that they used the basement bathroom every day and did not have any problems from July 2010, until the sale in 2011. He stated in court that he did not mention this to the buyers because he felt that this was no longer a problem.

In a decision released in July 2014, Judge John Rose of the Barrie Small Claims Court used the law of hidden defects to reach his decision. He said that if the seller knows about a defect that has caused any loss of use or enjoyment of a meaningful part of the premises, then it must be disclosed to the buyer.

The Region inspectors testified that they discussed the potential sewer pipe problem with McDevitt. This together along with the letter convinced the Judge that McDevitt knew about a structural problem with the pipe which should have been disclosed.

He awarded the buyers $10,500 for the repairs to the pipes but nothing for aggravated damages as the sellers did not do this with any ill motive and there was no evidence of mental distress.

The buyers were fortunate to have uncovered the evidence from the Region of Peel to support their position. Without it, it would have been difficult to prove that the sellers knew anything about this.

SO, if you are selling your Bracebridge home that has had a problem in the past that you believe is repaired OR that you know might reoccur…. disclose it. Then if the Buyer proceeds they will not have an actionable claim against you. As a busy Realtor I can assure you that a Buyer will likely still proceed with a purchase on a property that has some issues, as long as it is disclosed and is priced accordingly. The extra money you may have “made” on a sale with an undisclosed defect will quickly evaporate in a law suit. The days of Caveat Emptor in real estate are long gone and that is a good thing.