Caveat Emptor – Let the Buyer Beware
The law on Caveat Emptor was summarized in 1960 by Professor Bora Laskin as follows:
“Absent fraud, mistake or misrepresentation, a Purchaser takes existing property as he finds it, whether it be dilapidated, bug-infested or otherwise uninhabitable or deficient in expected amenities, unless he protects himself by contract terms.”
Bora Laskin rose to sit on the Supreme Court of Canada as the Chief Justice of that Court. However, the extremity of that Statement has now been modified by Statute and Common Law. The general principal of Caveat Emptor remains the governing principle in the law of Purchase and Sale unless your fact situation allows you to be excepted in some fashion from this doctrine.
The key defence against Caveat Emptor is your Agreement of Purchase and Sale. The doctrine of Caveat Emptor may be defeated by an express warranty contained in the Agreement of Purchase and Sale. This is the reason your agent will often put a warranty in with respect to the state of repair of an appliance as at the date of closing. Note that any such warranty as “as of the date of closing” and any complaints must be made immediately.
The best defence against Caveat Emptor is a well drafted Agreement of Purchase and Sale by a reputable and competent real estate agent. That agent will, for the purchase of resale homes, often recommend that a home inspection be carried out prior to the Agreement becoming firm and binding. Your agent can refer you to such an inspector but, in the event that you need such a referral, please do not hesitate to contact us.
It is the unusual transaction where the doctrine of Caveat Emptor is even called upon to come into play. However, it is a good idea that you understand the significance of this doctrine, so that you will understand the significance of both the home inspection and proper drafting of an Agreement of Purchase and Sale.