Hidden Defects After Buying a House in Ontario: Can You Sue?

You have closed, moved in, and then found a serious problem: water in the basement, a failing structure, or work that was never properly done. You may wonder whether the old idea of buyer beware means you are stuck with it.

There is no simple yes or no. Whether you have a claim depends on the details of your situation, including what was wrong, what the seller said and what your agreement says, so it is worth confirming with a lawyer. This article explains what you can check, what to gather, and when to see a lawyer.

What a hidden defect usually means

Whether a particular problem counts as a hidden defect depends on the facts of your situation. How it applies to you is worth confirming with a lawyer.

Whether buyer beware limits your options also depends on the facts and on court decisions. Be cautious about any online summary that promises a clear answer, and consider getting advice about your own situation.

Why the inspection condition and agreement matter

Conditions such as a satisfactory home inspection must be waived or performed by the agreed time before the deal becomes binding, and they must be used in good faith. Depending on how the condition is worded, if it is not met the buyer may terminate or the contract may end automatically, with the deposit returned. Once all conditions are waived, the agreement is firm and binding.

How your steps before closing affect a claim afterward depends on your situation, so it is worth confirming with a lawyer. Your agreement of purchase and sale, any seller disclosure documents and the listing are worth keeping together, along with any inspection report.

Permits and renovations

Buyers are told to find out whether proper permits were obtained for any renovations. In Ontario, a building permit is required before most construction, additions, renovations and changes of use, and the municipal building department can confirm what permits exist for a property.

If your problem comes from past renovation work, a check with the municipal building department may help show what was approved. It will not settle whether you have a legal claim, but it is useful information to bring to a lawyer.

If the home was newly built

New homes can come with Tarion warranty coverage. The one-year warranty starts on the date of possession (occupancy date for a condominium). The two-year warranty covers items such as water penetration and heating and electrical systems. The seven-year warranty covers major structural defects and runs to the seventh anniversary of possession.

Tarion claims use specific forms and timelines:

• The Initial Form can be started 1 day after possession and is automatically submitted on day 41.
• The Year-End Form opens on day 183 and is automatically submitted on day 365, with a 10-day grace period if you have written proof you reported the items to your builder.
• The Second-Year Form can be filed any time in year two.
• The Major Structural Defect Form can be filed after year two but no later than seven years from possession.

What to do next

• Take dated photos and video of the problem before anyone repairs it.
• Keep your agreement of purchase and sale, listing, inspection report, disclosure documents and emails with the seller and agents.
• Get a written assessment from a qualified contractor or engineer so you know the cause and cost.
• Check with the municipal building department about permits for the affected area.
• If the home is new, check your Tarion forms and dates right away.
• Speak to a lawyer soon, because deadlines may apply and delay can make a claim harder.

Frequently asked questions