Property Defects Found After Closing: Can You Sue the Seller in Ontario?

You moved in, and then the basement leaked or a structural problem showed itself. It is natural to ask whether the seller should have told you and whether you can get your money back.

The answer depends on what kind of defect it is, what the seller knew and what you could have found beforehand. This article explains the general rules in plain language so you know which questions to ask a lawyer.

Buyer beware: the starting point in Ontario

Ontario follows the rule known as buyer beware. A seller generally need not disclose patent defects, which are defects a buyer can find through reasonable inspection and inquiry. A stain on a ceiling you could see at a showing is an example of something you were expected to notice and ask about.

These duties come from case law, not from TRESA, the statute that governs real estate services. That is why outcomes depend so heavily on the specific facts.

Latent defects and what a seller must disclose

A latent defect is one that is not visible or discoverable through a reasonable inspection. A seller must disclose latent defects that make the property unfit for habitation, dangerous or potentially dangerous.

A hidden leak is not automatically a defect the seller had to disclose. Whether it made the home unfit or dangerous, and what the seller knew, are questions of fact.

When a seller can be held responsible

A seller who conceals a patent defect can lose the protection of buyer beware. Failing to disclose a latent defect may be treated as misrepresenting the property, and wilful blindness can also create liability.

Seller information statements can matter too. A seller property information statement is not a required form. A seller's agent may ask the seller to complete one, and it is based on the seller's own knowledge and experience. If the seller has prepared one for buyers, the seller's agent must tell every interested buyer that it exists and must give a copy to any buyer who asks. If you received a statement, compare what it said with what you found.

• Evidence of what the seller knew, such as earlier repair records or emails.
• Whether the problem was visible or discoverable when you viewed and inspected the home.
• Any statement, spoken or written, that the seller or agent made about the issue.
• Signs of recent patching or painting that may point to concealment.

The deadline to sue

Deadlines can apply to civil claims, and when the clock starts depends on the facts of your situation, so it is worth confirming with a lawyer. The exact period and how it applies to your situation should be confirmed with a lawyer, because a missed deadline can end an otherwise good claim. Do not wait to see whether the defect worsens before getting advice.

Your agreement of purchase and sale may also contain terms that affect a claim. Having a lawyer read it is a sensible early step.

What to do next

• Stop and document the problem with dated photos and video before any repair, except urgent work to prevent further damage.
• Keep receipts for emergency work and for any inspection or repair quotes.
• Gather your agreement of purchase and sale, home inspection report, listing materials and any seller information statement.
• Write down when and how you first noticed the problem.
• Notify your home insurer if the damage may be covered.
• Speak with a real estate or litigation lawyer promptly about your time limit and options.

A lawyer can look at the evidence, explain whether the defect is likely to be treated as patent or latent, and discuss whether a claim is worth pursuing given the likely repair cost.

Frequently asked questions