A homebuyer from Victoria, B.C., is upset over being hit with $50,000 worth of unexpected repairs to his basement, after the seller and his realtor didn't tell him about previous water leakage problems.
"We don't care — between the seller and the realtor — who was responsible for disclosing or who didn't disclose. The two of them knew there had been an issue with this house," said Glen Plummer.
His dilemma is similar to those of hundreds of Canadians who've gone to court in recent years, claiming they weren't told about known defects in homes they purchased. Sellers in every province are supposed to disclose any major, hidden defects to prospective buyers.
"We're stuck with a house that isn't livable … and we're out of money," said Plummer.
In Plummer's case, seller Jordan Pringle signed a disclosure statement in April 2009 saying he was not aware of any water problems in the house. One month after the sale went through, Plummer said the basement sprung a major leak.
"There's a section of the concrete floor that [since] had to be removed because the concrete was of such poor quality," said Plummer. It turns out, the seller also had water problems — in the same area — before the sale.
Pringle is a small-scale developer who bought the house to renovate and resell it. Documents show he attempted to fix the leak, by installing a new drainage system.
They also show that, after consulting his Re/Max realtor, Cal Faber, Pringle decided not to tell Plummer about the water problems. The rules in B.C. say if a defect has been fixed — it doesn't have to be disclosed.
Seller, realtor point fingers
"I was advised by Mr. Faber that since I had 'fixed the problem in my opinion,' I did not need to disclose the moisture problem that I had addressed," Pringle said in a sworn statement.
The realtor gave a different view of what happened in a statement to regulators.
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"I suggested to [the seller] that he mention the moisture issue and he felt it would devalue the house price if he did … it was Mr. Pringle who elected not to make any note of the previous moisture issue," wrote Faber.
"Two people are pointing to each other as to who is blame here — but we're stuck with the bills," said Plummer.
When he and his wife bought the house for $596,000, Plummer said he relied on the disclosure statement that said it had no hidden problems.
"We had an inspector come through and the inspector was very clear that they can look for visible defects," he said. "They can't look for anything that can't be seen by just kind of poking around."
A contractor has since told Plummer the repair done by the seller was substandard. Also, records show he did not have proper municipal permits for the work.
"Essentially, it was a Band-Aid stuck over a problem and that Band-Aid gave way," said Plummer.
The flood that wrecked his basement came just one month after the purchase — the week before his wedding. Plummer and his wife have since had a baby girl and he said they can't afford to finish the extensive repair job that's needed.
"It's the frustration of having bought this house to raise a family in. We have a young daughter and I can't even let her go down into the basement," he said.
Pringle and Faber both declined requests from CBC News to be interviewed, but both indicated they believe they did nothing wrong.
Plummer has since complained to the Victoria Real Estate Board and the Real Estate Council of B.C., which governs realtors.
The board told him it would wait for the council's ruling. The council told Plummer it would keep his file open, but essentially he has no case against the realtor at this point because he has no evidence the realtor knew about the leak.
"If it's been fixed, there's no longer a defect," said council spokesperson Larry Buttress. He pointed out that it's against the rules for realtors to tell buyers about problems their clients don't want disclosed.
The council suggested Plummer take his case to court, but he believes that would be a waste of more money.
"Estimates from lawyers are $10,000 to $20,000," said Plummer. "If we had that kind of money, we would finish the work on our basement. The court system is completely unaffordable to us."
"This is one of the most controversial areas in real estate today," said Bob Aaron, a Toronto lawyer who studied 200 recent lawsuits across Canada where homebuyers claimed they weren't told about major hidden defects.
Disclosure forms problematic
He said the disclosure forms sellers sign in Ontario, B.C. and other provinces are too limited and ambiguous, setting both sides up for court battles.
"A seller should not sign the forms, and a buyer should not ask for them, but instead rely on his or her own home inspection," said Aaron.
He suggests seller disclosure forms be scrapped, or have fewer, more pointed questions, like "Is there anything I don't know about this property that might change my mind about buying it?"
"That might make vendors a little more cautious about disclosing," he said.
In the cases he looked at, he said the rulings were "all over the map." Even people who won often didn't come out ahead.
"You could walk away from the court with a vindication or an award for damages, but the legal fees often exceed the amount at stake," he said.
Lawyer Mark Weisleider has written about disclosure in real estate transactions. He thinks signing statements actually protects sellers from lawsuits and helps them get more money for their properties.
However, he agrees with Aaron that buyers should beware and get an inspector who can look for hidden defects.
"Home inspections are getting better, with things like infrared mould testing," he said. "This will make sellers less likely to hide defects, because it will be found out."
Arne Kluge, who teaches home inspection across Canada, said there are still no guarantees.
"Even though licensed and certified home inspectors have gone through extensive training to recognize signs of defects, there can still be times when they may not be discovered," said Kluge.
"Hiring a home inspector can greatly reduce the risks of buying a house with problems but it cannot eliminate that risk."