If you purchased a home and later found an issue that was intentionally hidden from you by the seller, you could receive compensation for that misrepresentation.
The general rule is “buyer beware” in that a seller has no obligation to disclose a patent defect, meaning a defect that is discoverable upon a reasonable inspection.
However, a seller of a property has a legal responsibility to inform a buyer of any known latent defects, meaning defects that are not identifiable by a reasonable observation or inspection. This includes hidden damage behind walls or issues with the foundation that were not disclosed during the purchase of the property. In McGrath v. MacLean (1979), 22 O.R. (2d) 784 (Ont. C.A.), it was held that a purchaser must establish that the seller knew of the latent defects, concealed the latent defects or made representations with reckless disregard for the truth.
In Frawley v. Buckley, 1988 CanLII 7519 (NB QB), the real estate agent acting for the purchasers of a home saw a water line along one of the walls in the basement. The real estate agent asked the seller’s agent if there were any water problems in the basement and the answer was “no”. After this assurance that there was no water problem in the basement, the parties signed an agreement to purchase. Within months of purchasing the house, the basement was flooded during a rainstorm. It was found that prior to the purchase, the property had experienced five or six floods. The sellers stated that they thought they had remedied the situation, but the evidence suggested otherwise. Within two or three months of the most recent floods, the sellers met with a real estate agent looking to purchase a new home. The sellers testified to a list of reasons as to why they sold their home but they didn’t mention the floods that occurred in the previous spring. The court reasoned that it was obvious that the drainage system was expensive to remedy and that it was impossible to believe that the sellers forgot about how soon the floods occurred. In the seller’s list of reasons, they should have mentioned the most recent floods from the previous spring. When their own real estate asked if there had been any problems in the basement, the sellers mentioned accidental occurrences such as tubs overflowing, but specifically did not mention the water coming in because the drainage system was unable to take it away.
The court held in favour of the buyers. It was doubtful that the floods occurred only months before. The court held that the sellers knew of the water problems and deceitfully induced the buyers to purchase the house without advising them of the problem.
Concealing a known defect can be more than a physical cover-up. Not advising a seller of a defect can lead to similar harm. Our lawyers have dealt with many cases in these situations. If you purchased a home and believe there were issues hidden from you, give us a call for a free consultation.