Buying a Home? You Should Know About Caveat Emptor
Buying a home is stress-inducing. There are financial worries, logistical concerns, packing and unpacking, changes in lifestyle, different schools and new neighbourhoods. Sometimes there’s a new country and language to contend with and on top of that there is caveat emptor.
Caveat emptor is Latin and means ‘Let the buyer beware’. It’s a simple phrase, ‘emptor’ meaning buyer and ‘caveat’, from cavere, to beware or be careful, except it’s in the subjunctive third person singular so it has to do with potential pitfalls and…well, never mind.
It is important though, and to explain more here’s one of Fort McMurray’s favourite legal minds, Don Scott.
“One of the primary pieces of advice that I give buyers and sellers is that they should have professionals assist them with the purchase or sale of real estate. Realtors are trained to understand the real estate clauses in contracts and I recommend that you have a lawyer review the contract as part of your purchase or sale. Having a home inspection can also protect a buyer.”
What happens if you purchase a property and discover a major defect? While it may seem logical that the builder or vendor should pay for the damages or repairs, this is not always the case. Caveat emptor, in law, means the buyer is responsible to check the quality of what he is buying. In other words it is extremely important you take the steps necessary to ensure the property has no inherent defects. Once that sale is completed, the options available to remedy the defect are limited at best and often costly.
Buyers need to protect themselves either by a warranty from the seller or by independent examination of the premises and the onus is on the purchaser to ensure a home inspection is completed by a capable and licensed inspector.
Now, if you have purchased a property and later discover a defect there may be remedies available but do so, the applicant bears the burden of proof and, thus you must prove there was a breach of contract. Further to that, the purchaser must prove there was a negligent misrepresentation as to the quality and condition of the house. It must be established on the balance of probabilities that the seller breached the terms of the contract by failing to disclose the existence of a defect.
Wait, it gets worse. The defect needs to be hidden from a competent inspector.
Once again, what?
Here’s Don Scott again. “The law makes a distinction between, latent and patent defects. If the defect is found to be latent, it will create a liability when concealed by the defendant.
Patent defects, on the other hand, are those defects readily discoverable by ordinary inspection and as such the seller has no duty to disclose them.”
This means that if there is a hole in the roof, the kind that any reasonable inspector should see, and he doesn’t report it to you, then the hole becomes your hole when you buy the house. Meanwhile the Seller shrugs and says, “What do you mean your inspector didn’t tell you about the hole? It was right there, out in the open, waiting for him to report it to you.”
Do you have to have a home inspection? No But there is that little phrase we taught you at the beginning of the article, caveat emptor. Not having an inspection on what may very well be the most expensive thing you ever buy is short-sighted, but some people do want to cut corners. If you have had to pay for more than one inspection while trying to find a house, it can get to be expensive. Remember though, while it can be frustrating to pay for an inspection and then not buy the house, it can far worse to pay for the house without the inspection. The responsibility for ensuring you are buying a well-built property is on you the buyer, so take some time and look for an inspector you feel you can trust. Check his references and his licence and remember that licence isn’t a government recommendation so much as a minimum standard. Good inspectors keep learning because the building codes change, as do construction materials and ways. Make sure you are happy with your choice of inspector and make sure he is bonded and insured. It helps if they have a background in the building trades, as much of what they’re looking for comes from experience. Most of all, you need to find someone you can ask questions of, someone you feel you can trust.
What happens then if after all that you feel that you have a claim against the seller? It’s still not going to be easy. Back to Don. “Before a successful claim of negligent misrepresentation can be pursued against a seller, these requirements have to be met. 1. There must be a duty of care based on a “special relationship” between representor and representee. 2. The representation in question must be untrue, inaccurate, or misleading. 3. The representor must have acted negligently in making said representation. 4. Silence may amount to misrepresentation where what is left unsaid distorts the truth about a material fact. 5. The representee must have relied, in a reasonable manner, on a negligent misrepresentation 6. Reliance must have been detrimental to the representee in the sense that damages resulted.”
Caveat emptor implies a strict principle in relation to the sale and purchase of a property. Essentially this principle places the responsibility on the purchaser to complete an inspection prior to completion of the sale agreement and transfer of title. If you fail to do so, typically you cannot go back and claim damages against the seller. While there are ways in which to recover damages for defects in your property they are long winding roads you want to avoid if possible. Ultimately the success of your claim to recover damages will come down to the facts of your particular situation, along with the terms of your sale agreement and conveyance.
Before we scare you so much that you rent for the rest of your lives, remember that this article is a happy warning only. All we are saying is that a little preparation goes a long way towards a long and happy life in your new home, and much of this article is extra-extra precautionary. In much the same way you look at your take-out coffee, read the notice on it that says “may contain hot liquids” and think “Duh”, caveat emptor, when it comes to buying property is a warning that really doesn’t need to be made. As the emptor, about to sign up to pay lots of money over the next thirty years, you will already be caveating all over the place.
It is far more important to acknowledge that with such a large decision you really need the help of professionals. Use an experienced realtor, get a good lawyer and find an inspector you believe in, and if you need advice, Don Scott and his team are only a phone call away at 780-750-9888.