I’ve had a couple of cases recently that has brought this question to the fore.  When you buy a house and you find out that something is wrong with it, whose to blame?  The seller?  The Realtor®?  The Home Inspector?  All three?  The first question you have to ask is, “Who did the buyer rely upon when they bought the house?”  The second question is, “Was the defect a latent or a patent one?”

When the buyer relies upon some sort of representation, like a Seller’s Property Information Statement (SPIS), the seller is usually responsible.  When you have a home inspector brought in, the SPIS takes most of the liability.  I know, I know.  “Most?”  Don’t forget the second question.  Is it a latent or patent defect?

A patent defect is one which a purchaser is likely to discover if she inspects the subject property with ordinary care.[1]  A latent  defect is one not discoverable on casual inspection and not observable.  It is a defect which a reasonably careful inspection will not reveal.[2]  As a general rule, home inspectors do not move things around to find problems.  They will look around; if they see something, then they will make note of it and bring it to your attention.  Home inspectors will not open holes in walls to check for mold, or check systems that require an expert, like a septic system.  There is usually a list of what a home inspector will not look for in the contract with the person requesting the inspection.

Latent defects will lessen their liability to the cost of the home inspection.  If the home inspector does not bring to your attention what the inspection will and will not cover before you sign, then the value of the report may be reduced to zero and you could claim your money back.

Patent defects, on the other hand, can put the representation scale all the way to the home inspector.  In Halliwell v. Lazarus, the trial found that the buyer of the home relied upon the assurances of the home inspector that the moisture problem could have been discovered by using their five senses.  At first the inspector was only responsible for 50% of the damages of $90,000.00.  In the appeal, the inspector’s liability was raised to 100%.

Furthermore, if a home inspector sees something, and does not report to you about it, the courts have considered those instances to be fraudulent misrepresentations.  Being silent does not excuse home inspectors at all.

If you have discovered a problem with the purchase of your home, and it is within the Ontario Small Claims Court limit of $25,000.00, call me to get a free half-hour legal consultation to determine your options.

[1] Pocket Dictionary of Canadian Law,  4th Edition, ©2006 Thomson Canada Limited, by Daphne Dukelow, pg. 348

[2] Ibid., pg. 273