by Merv Burgard, Q.C
In this real estate transaction, the Agreement of Purchase and Sale (APS) contained the following separate clauses:
“The seller represents and warrants that the chattels and fixtures as included in this Agreement of Purchase and Sale will be in good working order and free from all liens and encumbrances on completion.”
“The seller represents and warrants that the swimming pool and equipment are now, and on the completion date shall be, in good working order. The Parties agree that this representation and warranty shall survive and not merge on completion of this transaction, but apply only to the state of the property existing at completion of this transaction.”
The buyers waived a home inspection and after the deal closed discovered problems with the furnace and the pool, sued the sellers and lost.
The judge noted that the first clause did not have a survival clause. He also said that: “When representations and warranties of this sort are given, purchasers should inspect the property just before closing to ensure that the vendor’s warranties are true. If anything is not working, the problems can be addressed before closing. If they cannot be addressed, the purchaser will at least have some proof that there was a problem that existed before closing. Otherwise, if the purchaser discovers a problem with respect to a warranted fixture, chattel, or the state of the property after closing and they do not have proof, on a balance of probabilities, that the problem existed at the time of closing, they will not succeed in a claim for breach of warranty under the Agreement of Purchase and Sale.”
He also suggested, “As an aside, there were many ways that the plaintiff could have protected her interests in relation to the pool equipment. She and her husband could have included a clause in the APS that the pool equipment be in good working order as of a certain date after the closing date and thereby given themselves the opportunity to open the pool and inspect the equipment to verify the defendant’s warranty.
They also could have included a clause that required the defendant to open the pool and ensure that the pool equipment was in good working order before the closing date. There also could have been a provision in the APS that monies be held back as security on closing to ensure that the pool equipment was working on the closing date, failing which the funds could have been used to fix the pool if the Defendant failed to live up to the warranty.
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Lastly, the plaintiff and her husband likely made a mistake in not ensuring that they had a right to inspect the pool and its equipment (or any other fixtures and chattels included in the APS) on the closing date to satisfy themselves that the pool equipment and the furnace were in good working order. Had they done so, they likely would have avoided the grief and additional cost associated with the purchase of their home.”
Robinson v. Hobbs-Lingard 2015 CanLII 40843 (ON SCSM)
What should buyers and their REALTORS® do to prevent such a result? A home inspection and professional inspections for items such as a furnace, a pool and other major components of a home may be very prudent. Extensive warranties may protect them and the items noted above may need additional verification based on the circumstances. Sometimes a pool warranty may need a time period for inspection after closing, especially during a winter transaction.
Mervin Burgard, Q.C.
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