Home Gavel KeysWhether you are upsizing to a family-sized home, or downsizing from a full family home to an empty-nester, you still have to sell the home that you are currently living in.  It’s a stressful time: planning a move, talking to Realtors, looking for your next home, and sprucing-up your existing home to allow the parade of strangers to scrutinize every décor choice you ever had the courage of committing to your four walls.  Then it’s the hand-wringing of putting in offers on a home you like versus bargaining for the best price for your home that you are selling to some complete stranger.  All of the deals close, you move, and you think that you can safely move on to the next chapter of your life.

A new stranger knocks on your door.  You open it.  He or she says your name as if they have something very important to say to you.  They hand you a document:  a Plaintiff’s Claim from the purchaser of your old house suing you for up to $25,000.00 in Small Claims Court!

As a paralegal, I’m starting to see more and more of these claims where I help these defendants out of a jam that’s not of their own making.  These Plaintiffs all say the same thing:  the seller (you) mislead the vendor; the seller (you) deliberately hid a defect in the house and failed to inform the purchaser.  The weird thing is that they brought in a home inspector to take a look around.  Why didn’t they mention it at the time of the inspection?

In my experience, I’ve found that the Plaintiff is, or in a relationship with, a contractor of some sort.  These litigants are under the assumption that big ticket items they want to do in your old home (whatever it may be) can be paid for by you.  Besides, from all of that money the Plaintiff spent in purchasing your old house, your pockets are deep, right?

And now, a little bit of law.  There is no obligation for the vendor to disclose anything to the purchaser unless the vendor knows that the condition makes the property uninhabitable, dangerous, or potentially dangerous.  For fraudulent misrepresentation, the plaintiff must prove the following:  1) that the vendor made a false representation of a fact; 2) that the vendor knew the statement was false or reckless to its truth; 3) that the vender knew that the false representation would be acted upon by the purchaser; 4) that the purchaser relied upon the false representation; and 5) the purchaser had suffered damages as a result.  For negligent misrepresentation, the plaintiff must prove the following:  1) that the vendor owed the purchaser a duty of care; 2) the vendor made a false statement to the purchaser; 3) that there was negligence on the part of the vendor in making the statement; 4) a reasonable reliance on the statement by the purchaser as to the truth of the statement; and 5) the purchaser suffered damages as a result.  Here is the last bit of law for you to consider:  when the purchaser hires a home inspector, the liability for a wrong report (or false representation, in legalese) falls to the home inspector, not the vendor.

So, what can you do to help defend yourself from a nuisance lawsuit from a home purchaser?

  1. Never, ever, fill out and sign a Seller’s Property Information Sheet (SPIS). The court finds these documents as representations.
  2. Never, ever, pay for a home inspection report. Leave it up to the purchaser to do the inspection.
  3. Don’t show up at your house on the day of the home inspection. I know you want to be helpful, but stay out of the way.  Any innocent thing that you may say might be construed as a representation of the quality of the house.
  4. Talk with your Realtor about disclosure of repairs done to the property. As a bit of background, my wife and I sold a home in Toronto.  We disclosed that the house is in a known termite area and that it had been previously treated.  We paid for a new protective treatment and handed over the warranty provided by the pest control company to the purchaser.  We also disclosed that our furnace, even though we had no problems with it, was part of a recent recall due to a manufacturer’s defect, and was still under warranty by the manufacturer.  Let your conscience be your guide on this one.

If you are named as a Defendant to a Small Claims Court claim for either fraudulent misrepresentation, negligent misrepresentation, or failure to disclose information in a home sale, contact us to schedule an appointment for a free half-hour consultation and discuss your options.