The house you’ve decided to buy looks in good shape. Of course it’s expensive, and you have to pay transfer tax, legal fees and moving costs on top – so should you bother with an inspection, one more cost? Absolutely!

Peter and Anne (names changed) were looking for a house for their young family. Peter and his dad looked at one they liked on land not far from Peter’s dad’s home in Chilliwack. An offer for the property was accepted by the owners, the Millers, for $1 million. The offer was subject to the buyer getting and approving an inspection report against, in effect, any costly or significant defects.

The buyer’s inspection report identified some deficiencies, but nothing about moisture damage and the inspection condition was removed.

Some days afterwards, Peter’s dad heard that mould and rot had been discovered in the framing a few years earlier during an insurance claim investigation.

The Millers rebuffed attempts for a more extensive examination and said the insurance claim problem had been fixed. They also refused to set aside any money from the sale proceeds to deal with any problems and threatened to pocket the deposit if the sale didn’t go through. So the purchase of the property was completed, with Peter and Anne telling the Millers they’d do a detailed inspection and give the Millers an estimate of the repair costs.

The house was discovered to have widespread rot and mould in the outside walls due to ongoing issues with water getting in from two problem areas. The repair costs to replace the cladding and some of the framing came to over $140,000.

The court highlighted that a buyer has to meet a high standard to investigate potential problems with a finished house – if a reasonable inspection by a qualified person would have brought them to light, they are “patent” defects that a seller need not point out to the buyer, who’d be stuck with them. The rule is still very much “buyer beware.”

But in this case, the court said the Millers were responsible for the buyer’s $140,000-plus repair costs and part of their legal costs.

Here, inspections by two qualified inspectors didn’t initially reveal the defects because home inspectors are limited in what they can do – they can’t take invasive measures like drilling test holes or removing foam insulation to look behind. So the defects here were “latent” or hidden. Sellers who know or should reasonably have known of such latent defects have to tell buyers about them.

The Millers had been told after the insurance claim inspection that there was rot and mould in the structural framing due to ongoing problems of water getting in. The estimate to fix them was $50-60,000 or more. But they made only inadequate makeshift repairs. And there were water problems with the structural framing in another part of the house which they also didn’t deal with adequately.

In addition, the Millers’ answers in the property disclosure statement about what they knew about water problems were, at best, misleading. They mentioned minor past issues but said nothing about the two major problem areas they knew about. This was deceptive and amounted to “fraudulent misrepresentation.”


Written by Janice and George Mucalov, LL.B.s with contribution by COBBETT & COTTON. This column provides information only and must not be relied on for legal advice. Please contact COBBETT & COTTON for legal advice concerning your particular case. Names of the parties in reported cases have been changed or removed to protect their identity. Lawyer Janice Mucalov is an award-winning legal writer. “You and the Law” is a registered trade-mark. ©Janice and George Mucalov.

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