June 11th - 2012

Legal Beat: Buyers ignored red flags, judge rules

The buyers did not have enough money on the closing date of July 6, 1999, to complete their deal. Their REALTOR® lent them $74,500.

The buyers did not have enough money on the closing date of July 6, 1999, to complete their deal. Their REALTOR® lent them $74,500. Over the next 15 months they repaid her $14,825. On June 29, 2000, the buyers gave her three cheques, each for $725. However, the first two cheques bounced due to Non-Sufficient Funds while the third cheque went through successfully on October 26, 2000.

The REALTOR® launched this lawsuit on Sept. 15, 2006. The buyers made several claims, including that the action was too late under the-then Ontario Limitations Act period of six years (now two years). The judge decided that the action was not statute- barred and the REALTOR® was entitled to judgment.

The buyers then claimed damages against the REALTOR® for misrepresenting the property at the time of the purchase. Such a claim depends on the facts of each case. The judge believed the real estate professional that no misrepresentations were made.

In any event, the buyers had obtained a home inspection. The report observed a “crack noted at left middle and rear (main house and studio). Suggest asking the vendor if there has ever been any basement leakage.” It also noted “Limited review due to personal storage items. Normal moisture levels were observed at the time of inspection. Staining noted at the right side furnace room.” The buyers did not follow through on the suggestions made by the inspector. They later complained about the inspector’s services and the inspector refunded his fee.

Regarding the claim against the REALTOR®, the judge stated, “The evidence is clear that the defendants placed no reliance on any statement which the plaintiff may have made in that regard. The defendants relied on the AmeriSpec [home inspection] report. Once they received it, they waived the home inspection condition and proceeded to close the purchase.

As noted above, the report raised several red flags about possible water leakage in the basement and recommended that the purchasers make inquiries of the vendors. The defendants ignored the red flags, made no inquiries, and waived the condition. Following their occupancy of the property, the defendants made no complaint to [the REALTOR®] about the condition of the basement. In such circumstances, I conclude that the evidence discloses that the defendants placed no reliance on any statement made by the plaintiff about the condition of the basement.”

Emmott v Edmonds 2010 ONSC 4185

MERV'S COMMENTS
It is difficult for buyers to argue that they are relying on the word of the seller or REALTOR® when they obtain an independent inspection. When you are dealing with buyers, insist that they get a home inspection. 

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