In the Greater Toronto Area’s extremely competitive real estate market, buyers often rush in with unconditional bids. The scramble on offer day means that many people neglect the home inspection until it’s too late.
Typically, home sellers pay for a pre-listing home inspection, which their real estate agent then provides to prospective buyers in advance of the offer date. While that may be reassuring to some buyers, it may leave others wondering what recourse, if any, they have in the event that the seller’s home inspection report is inaccurate, or worse, intentionally misleading.
Home inspectors owe a duty of care when they perform an inspection, and may be found liable if the inspection falls below the standard of care. The standard of care is that of a reasonable visual inspection in accordance with industry standards. The cost of the inspection and the inspector’s level of expertise help determine what counts as a reasonable inspection.1
Courts have accepted that home inspections are general and performed visually. This means that home inspectors are not expected to find all issues with a home, and they will not be held liable for any issues that were not readily apparent based on a visual inspection.2
In situations where a home inspector was retained by the seller, there is no contracted relationship between the home inspector and the buyer, and buyers may not be able to bring an action against the home inspector on this basis. However, depending on the facts of the case, an inspector may be held liable on the basis of negligent misrepresentation.
In Kent v. MacDonald,3 the defendant home owner retained an engineer in order to provide a report on the structural integrity of the home. The report was commissioned for the benefit of the buyers after the buyers had already obtained their own home inspection report indicating that there was a crack in the foundation. The engineer retained by the sellers stated that the home was structurally sound, which did not turn out to be the case. In assessing the engineer’s liability, the court applied the principles for negligent misrepresentation from Hedley v. Byrne and ultimately decided the engineer fell below the standard of a reasonably competent engineer in the circumstances. He was found to be liable to the buyers for the ensuing damages related to the home’s structural issues.
Kent v. MacDonald shows the benefit of doing your own research. The outcome might be different in a scenario where a pre-listing inspection is provided to all potential buyers, as opposed to specific buyers in order to address their discreet concerns.
Purchasing a home is big decision. In order to avoid a big disappointment, and ensuing litigation, “buyer beware” is a basic but sound principle. It pays to check every nook and cranny before the offer date.
With thanks to Faith Reid, our articling student, for providing an excellent case law summary of this topic.
depending on the facts of the case, an inspector may be held liable on the basis of negligent misrepresentation