How Long are You Liable After Selling a House in Canada

| Selling

In theory, once your home is sold you can let out a sigh of relief and start packing. Unfortunately, things aren’t always quite that simple. There are still certain legal obligations that can impact sellers years after closing.

So how long are you liable after selling a house in Canada? It’s complicated.

Here’s our “Cole’s Notes” version to help you get the gist of it.

Seller Due Diligence

Due diligence ensures you take “reasonable steps” to understand your legal requirements as a seller. When due diligence is conducted properly, you help reduce liability risks. Because real estate law is complex, finding the right real estate team is the most important step when performing your own due diligence.

Our obligation under the REBBA 2002 Code of Ethics is to verify material information or facts about your property to ensure buyers can make an informed decision. So, as your real estate team, our due diligence helps ensure everything is on the up and up.

Read our post: What Does Due Diligence Mean in Real Estate for a more in-depth look.

Liability and Full Disclosure When Selling

Real estate agents also act as seller’s “true confessors” for a little lifesaving process called full disclosure. You must fully disclose all known information that can impact your home value, condition and other details that can impact the buyer’s use of the property. This is not limited to physical issues but also other less tangible issues such as troublesome neighbours.

To make things more transparent, sellers must fill out a mandatory Seller Disclosure Latent Defect(s) listing structural defects, system issues such as HVAC, and any home improvements they made.

You can also avoid post-closing woes by taking the TMI (too much information) route. We can help you complete a Seller Property Information Statement (SPIS) to ensure you don’t inadvertently miss something you should have disclosed. That way the buyer has little recourse should they encounter issues you’ve disclosed, such as:

  • Damage and defects
  • Hazards like faulty electrical
  • Water damage
  • Mould
  • Plumbing issues

The Initial Inspection When Selling

You actually aren’t required to have a home inspection performed as a seller in Ontario. However, a professional inspection will spot defects and issues that can interfere with your transaction.

An assessment is also the best way to gain buyer trust, with full transparency about the home’s condition. Your real estate agent can use the list of issues to recommend what, if any issues should be repaired prior to listing. They’ll know the types of red flags that will negatively impact your home value and ability to attract offers.

The flip side

Remember, once you’ve peeled back that curtain, you can’t unlearn it. Anything found must be disclosed.

Do you have more selling questions? Here are a few more posts you might like to read next:

Potential Legal Issues After Selling

That brings us to potential legal issues after selling, including:

Inadequate Due Diligence/Failure to Disclose

Sellers are responsible for the costs related to undisclosed or missed issues related to inadequate due diligence. Some common issues that can lead to lawsuits might include:

  • Historic events like flooding, fires, or illegal activity (from murder to meth labs)
  • Land use conflicts that impact the buyer’s ability to modify the home
  • Outstanding liens such as unpaid contractor debt that is passed onto the new owner
  • Environmental hazards such as asbestos or lead paint
  • Easements and encroachments that impact boundaries, existing structures, rights of way, etc.

Selling your home is a big decision. It’s important to work with someone you can trust. But is it a good idea to hire your friend to sell your house? Read this post next to find out! 

Title Issues

Issues or disputes over property title claims occur when the trail of past ownership, usage, and issues are not discovered through a title search. Title searches also reveal issues such as outstanding mortgages, judgments, or tax arrears on the property. Public records can also be searched for issues regarding permits, compliance issues or code violations that end up costing the new owner money or interfere with their use of the property. Ask your real estate agent if it makes sense to invest in title insurance to protect against title issues.

Bad Contracts

Ambiguous contracts can also cause disputes that lead to litigation or transaction failure. Working with a knowledgeable real estate agent ensures your contract is transparent to limit liability.

The Bottom Line

Basically, once you sell your home, you’re generally liable for undisclosed material defects for two years from the date of purchase if you intentionally concealed known defects or made misrepresentations. That said, you could still potentially be on the hook for any of the above issues as far out as 10 years. Although Ontario has a lawsuit Statute of Limitations of two years, the two years is based on the time of discovery. That could leave some more serious issues open to legal interpretation without proof of proper disclosure and due diligence.

Your best defense is finding the right real estate professionals to ensure:

  • Due diligence is thorough
  • You understand what to disclose and that all known issues are disclosed
  • Assessments are made
  • Agreements are clear

As long as you have an experienced real estate team in your corner, you’ll greatly reduce the risks of common issues coming back to bite you in the you know what!

Looking for the best real estate team in Toronto to sell your home? Ahem, we’re right here! Get in touch with The Christine Cowern Team by filling out the form on this page, calling 416.291.7372, or emailing hello@christinecowern.com today!