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Beware of Bog

by Michael A. Mann

In this article, Michael A. Mann offers some sound advice to bear in mind when purchasing real property.

When you are buying a home, a used car, or any items which are typically purchased from individuals (as opposed to businesses who customarily sell those items as part of their business), the rule of law that applies to this situation is caveat emptor. This Latin phrase is translated to mean “Buyer Beware”.

It may come as a surprise to you that a person who is selling an asset is generally under no obligation to tell you about the condition of that asset. Ontario courts have determined that the purchaser has to protect his own interests by inspecting the assets before he purchases them. If he makes the mistake of purchasing the items without considering their condition, then he is stuck with the assets and the bargain that he has made, regardless of the faults or defects that the assets may have. Therefore, as a purchaser, your most prudent course of action is to ask specific questions (preferably in writing) relating to the property.

Consider, for example, the steps you should take when purchasing a home. You need to become well-informed about the nature of the property that you’re buying. In legal terms, you need to perform “due diligence” searches. This means that you (or your lawyer) should:

a) search the title to the property to make sure that you will not be buying it subject to mortgages or liens that have been registered in the past;

b) conduct searches with the City Zoning Department to ensure compliance;

c) search gas, hydro and water department records to make sure there are no arrears and that no work orders have attached to the property; d) consider having the home inspected by a qualified house inspector; and

e) ask the Vendor or the real estate agent about the condition and age of the furnace, roof, plumbing, electrical service, etc., etc., etc.

As you may imagine, the list of due diligence searches and questions to ask the vendor is endless. I do not recommend that you badger the vendor with every possible question relating to the property; however, you should not go to the other extreme of failing to ask important questions.

I know of one person who purchased a rural property and planned on building a house and other buildings on the land. When she was making plans for construction she found out that most of the property was part of a dried up swamp which could not withstand the construction of a home. Unfortunately, she did not ask questions about the condition of the soil prior to her purchase, and she had no recourse against the vendor. To this day, she has not been able to re-sell the property but has marked her improvident deal with a sign on the lot that reads, “Beware of Bog”.

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