Spring is most often associated with renewal and relief from the dreariness of a cold winter. Unfortunately, this is also a time when many homeowners see sign of water infiltration in their basements. While in extreme cases, this can be evident by actual flooding, in other cases evidence of water infiltration can take the form of dampness that could lead to visible mould or rot, or even a musty smell. Efflorescence, a white powdery substance that appears either on the outside walls or inside basement walls is another tell-tale sign of dampness.
While many long-terms owners of a properties may be accustomed to these problems in their homes, homeowners who may have purchased their home in the previous year may discover these issues for the first time. Often, remediating these issues can costs tens of thousands of dollars and are a major burden to the homeowner.
Seeking recovery of these costs from the former owners (vendors) of the property is natural and in some cases is a warranted. However, before commencing a legal action with respect to these damages, there are some factors that the homeowner should take into consideration.
First, the homeowner should look at the Agreement of Purchase and Sale to see if there were any representations or warranties provided with respect to these issues. In some cases, the agreement may provide no warranties at all and in fact confirm that the property was being sold on a “as is” basis.
Second, the homeowner may want to consider whether this issue could have been discovered by observation or by a visual inspection of the property (patent defect) or whether this is a defect that would not be discoverable by mere observation or by a basic visual inspection (latent defect).
Typically, the homeowner will not be able to recover damages that are caused by a patent defect. It is also unlikely that the previous owners would be held liable for damages from defects that they did not have knowledge of.
In Ontario, there is some conflicting case law on the issue of whether vendors are required to disclose to buyers latent defects that they are aware of. In Thomas v. Raynard (2014), the Ontario Small Claims Court undertook a detailed analysis of this issue and ultimately held that a vendor had no legal duty to disclose a latent defect that did not render the premises uninhabitable or inherently dangerous. There is a duty to not cover up such a defect such as repainting or replacing furniture or carpeting strategically to hide evidence of water infiltration. This approach to the law of latent defects restricts the ability of homeowners to seek recovery for damages suffered as a result of a vendor’s failure to disclose, unless there was a cover up.
As with most cases, the facts of each individual case would be determinative of whether or not damages are recoverable in cases involving latent defects. Potential litigants should gather information and seek a professional legal opinion prior to venturing down a path of expensive litigation.
For further information on this issue, please contact our Disputes and Litigation team at Merovitz Potechin LLP.