I sold a house in Mississauga where there had been a flood in the basement due to a leaking dishwasher supply hose. The damage was repaired and after the final finishes there was no sign of any damage whatsoever. The place looked spectacular. Does the seller have an obligation to tell the buyer of this damage?
In real estate this is called a Latent Defect (hidden) and yes, it must be disclosed by the seller. Imagine mould issues in the future and the new buyer finding out about this flood that the seller did not disclose. Lawsuit. Buyers can protect themselves by conducting an insurance search against the property to see if any insurance claims were made.
The seller can argue that the buyer had a home inspection done so I’m covered. Not quite. The purpose of a home inspection is to find “visible defects” and familiarize the buyer with what they’re buying. A good inspector will catch a crack in the window, appliances not working, or damage to roof or walls. Unlike a latent defect, Visible Defects that a home inspector can catch, do not need to be disclosed.
What if there was a murder or suicide on the property or next door? Do you think the sellers have to disclose this? The short answer is NO, they do not. The law may evolve to make disclosure of psychological stigmas mandatory. It is always a good idea to punch in the address into Google – the source of all wisdom and see if any ghosts pop up.
I always advise my clients not to hide behind caveat emptor and disclose any surprises about the property that may lead to an unhappy buyer in the future.
My articles are for general information based on my experience and I do not warrant the accuracy of the information contained herein. I recommend that you get independent counsel from your attorney.