What Is Caveat Emptor and How Does It Affect Selling a Home in Alberta?
This answer covers the law of Alberta.
Caveat emptor means "let the buyer beware." In Alberta it is the common-law starting point: without an express warranty, contractual condition, collateral contract, fraud, or error in substantialibus, the buyer takes the land with its defects after conveyance. A buyer of a finished house also cannot rely on an implied warranty of habitability.
Sellers must disclose material latent defects they know about and cannot mislead buyers about condition. A material latent defect cannot be discerned through a reasonable inspection, or makes the property dangerous or unfit for habitation. If a licensee is acting as the seller's sole agent, the licensee must disclose to all buyers the material latent defects they know of, so a seller who tells their realtor about a known defect makes the realtor disclose it.
You need not tell buyers that a home is conditionally sold when you accept offers. A buyer generally has 2 years from when they knew or ought to have known of the injury to seek a remedial order, and claims are also barred 10 years after the claim arose, though that period is suspended while a seller fraudulently conceals the injury. What applies to you depends on the facts, so confirm with a lawyer.
Key takeaways
- Caveat emptor is the common-law starting point, but it gives no protection to a seller who commits fraud or misrepresentation, gives an express warranty, or makes a collateral contract.
- Sellers must disclose material latent defects they know about, and a defect can be more than physical, such as missing building or other permits.
- A seller who tells their realtor about a known defect makes the realtor disclose it to buyers.
- A seller has no obligation to tell potential buyers that the home is conditionally sold when accepting offers.