January 7th - 2003

A marble might have helped

After the seller said that it was a "good" house, the buyer prepared an offer conditional on a home inspection.

After the seller said that it was a "good" house, the buyer prepared an offer conditional on a home inspection. The inspection was done and the report had a "disclaimer" clause. Despite the disclaimer, the deal closed.

The house was about 48 feet long, and after moving in, the buyer discovered that there was a 12 inch drop on the main floor from the front to the rear. It appeared that it was built that way and had not subsided over time.

The seller was not liable since, according to the judge, the words that were used were "puffing" and not representations. Even if they were negligent misrepresentations, the buyer was clearly not relying on them since the defect was an obvious or “patent” one. The buyer had also ordered a home inspection report. The home inspector should have noticed such a difference in elevation, despite the fact that the house was structurally sound.

MERV'S COMMENTS
1. A seller's marketing comments may not rise to the level of a legal representation.

2. "Caveat emptor" is still a basic rule.

3. Home inspectors are liable for negligence.

4. A disclaimer will not help the drafter of such a provision if there is a fundamental breach of contract. That applies to inspectors, REALTORS and others using such provisions.

5. Sellers might be wise to insist on a conditional offer with a home inspection clause.

The buyers must establish a misrepresentation that they were relying on. As the judge said, "... the insertion of a condition which specifically reserves the right of inspection to the purchaser completely answers the reliance issue which is incumbent on the plaintiff (buyer) to establish on a balance of probabilities."

Buyers should take along a marble when viewing a property, and home inspectors should use a level. Disclaimers may not work for serious problems as this case illustrates. They definitely won't work to protect REALTORS or others who have ethical disclosure requirements.

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Jean-Adrien Delicano

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416-445-9910 ext. 246

Ontario Real Estate Association
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