Buyer recourse and seller obligations in a transaction
Disclaimer: This content is not to be relied upon as legal advice as it is for informational purposes only.
When you're buying a home, it’s crucial to understand your rights as a buyer, especially when things don't go as planned after closing. Whether it's a broken appliance, unexpected repairs, or undisclosed defects, knowing what recourse you have can help you avoid costly mistakes. Here, we’ll dive into the buyer’s options, seller obligations, and ways to protect yourself from potential legal issues during a real estate transaction.
1. What are the buyer’s options if something breaks after moving in?
After moving in, what happens if something breaks or isn't as expected? Buyers need to be aware of their options when things go wrong after closing.
If a problem arises that was supposed to be repaired before the deal closed, buyers may have legal recourse, depending on the terms of the agreement. Sellers are required to fulfill any promises made about repairs before closing, and if they fail to do so, buyers can pursue legal action. However, once the deal is done, the options are more limited. For minor issues, buyers might be able to negotiate repairs or compensation with the seller if found before closing. If significant defects are discovered after closing, pursuing legal action through small claims court.
2. Are there instances where a buyer doesn’t have to close due to defects?
Though very rare, there are instances where a buyer may have to walk away from a deal, or have grounds to delay a deal. These situations generally involve significant problems that change what was substantially bargained for in the offer. Here are a few examples:
Major fire or flood: Physical damage that is not easily remediated
Title defects: A lien registered on title that the seller has not remediated
Otherwise, it is both the buyer and the seller’s duty to act in good faith and close the transaction.
3. What’s the difference between a patent and latent defect?
Understanding the difference between patent and latent defects is key for both buyers and sellers. Here’s what you need to know:
Patent defects are visible and easy to identify, such as a cracked wall or a broken window. These can be detected during a standard home inspection and should be addressed in the negotiation process.
Latent defects are hidden issues that are not apparent during a typical inspection. These might include things like mold hidden inside walls or plumbing issues that can’t be detected through normal inspection methods. Sellers are required to disclose latent defects because these issues are not easily seen and could potentially lead to expensive repairs down the line.
Understanding these differences helps buyers know what to expect, and it also has the possibility of avoiding stressful or costly litigation for the sellers.
4. What types of disclosures must a seller make with respect to defects?
Sellers are legally required to disclose any latent defects that could affect the property's safety, value, or usability. This includes:
Hidden water damage
Foundation issues
Faulty wiring or plumbing
Mold or pest infestations
Failure to disclose these issues could result in serious legal consequences for the seller, including lawsuits or claims for damages. Buyers should carefully review all disclosures provided by the seller and may want to work with their real estate agent, lawyer and home inspector, to ensure that everything is accounted for.
5. What happens if disclosures aren’t made?
If a seller intentionally withholds or fails to disclose critical issues, such as latent defects, the buyer may have grounds for a legal claim. Buyers can pursue the following:
Breach of contract: If the seller failed to meet disclosure requirements.
Negligence claims: If the seller was aware of a defect but chose not to disclose it.
Failure to disclose significant issues can delay the closing, cause legal disputes, and potentially lead to financial losses. It's essential to ensure that all necessary disclosures are made at the earliest practicable time.
6. What would you recommend a buyer do when buying a place to avoid litigation?
While litigation is always a last resort, there are steps buyers can take to minimize the risk of legal issues:
Schedule a home inspection: A professional inspection can uncover hidden defects that aren’t visible during a regular showing. This is one of the most effective ways to protect yourself.
Review disclosures carefully: Ensure the seller has disclosed all known defects. If anything seems missing, don’t hesitate to ask for clarification.
Protect yourself with conditions: Ensure your deposit is protected and that you can back out if a condition during a certain period of time if not met.
Specify clauses in the agreement: A clause in the agreement stating that the seller represents and warrants the appliances to be in good working order, for example can mitigate the risk of an unpleasant discovery on closing.
Conduct a final walkthrough: Before closing, make sure all repairs have been completed and the property is in the condition promised. If something is off, prior to closing is the best time to address it.
Taking these steps can give you peace of mind and reduce the chances of ending up in a costly dispute after closing.
7. Up until when could we conduct our final buyer visit prior to closing?
The final buyer walkthrough is typically scheduled within 24-48 hours of closing. This is your last chance to verify that the property is in the same condition as it was when you made the offer, and that any agreed-upon repairs have been completed.
It’s crucial to use this visit as an opportunity to double-check everything—once you close, recourse on a seller becomes much more limited.
Conclusion: Protect yourself during the buying process:
Having the right agent, lawyer, or home inspector in your corner is extremely beneficial during the buying process, and as a Toronto realtor, I emphasize the importance of working with professionals who are committed to helping you navigate the complexities of real estate. Disclosures don’t always have a negative impact, I often see a lot of sellers disclosing the non-legal retrofit of a basement, which is very common in a lot of freehold houses with a secondary unit. This protects the sellers from litigation. A buyer may have no issues with the disclosures being made because they could either have the experience in renovation, or are willing to look past the disclosures due to area, specifics in a property, or the nature of the market (i.e. a sellers market).
One thing for certain, buyers have the onus to do their complete due diligence (legally referred to as “Buyer Beware”). Especially where homes are sold in as-is condition, it’s very important to do all the investigations necessary.
The process of buying a home can be complex, but understanding your rights and obligations as a buyer can help protect you from legal issues and ensure a smooth transaction. Always be proactive—ask the right questions, review the disclosures, and schedule professional inspections. By doing so, you’ll reduce the risk of facing costly problems down the road and enjoy peace of mind as you move into your new home.
