More homeowners seeking litigation after buying without conditions, lawyer says

An Ottawa litigation lawyer says she’s seen a “significant increase” in the number of clients who purchased a home with no conditions and are now seeking legal recourse for problems that popped up after move-in.

Problems found after moving in leads to 'significant increase' in clients for Ottawa lawyer

Erin Durant, a litigation lawyer in Ottawa, said she has seen a 'significant increase' in the number of clients seeking help after discovering issues with homes they purchased with offers that had no conditions. (Robyn Miller/CBC)

A litigation lawyer says she's seen a "significant increase" in the number of clients who purchased a home with no conditions and are now seeking legal recourse for problems that popped up after moving in.

The hot housing market in several Canadian cities, including Ottawa, has led to many people submitting offers without conditions and sometimes without even seeing inside the home.

There are clear risks to that decision, and for some, serious problems are found after they sign along the dotted line.

"People get the house, they move in, they're all excited and they discover some big issue, whether it's a foundation issue, another structural issue and because of the way the law works and the 'buyer beware' principle, they're often stuck with it," said Erin Durant of Durant Barristers in Ottawa.

2021 was the busiest year ever for Canada's housing market, according to a recent report by the Canadian Real Estate Association, which also said average selling prices climbed to new highs.

The frenzied market puts pressure on buyers to inherit risk, such as holding back on conditions, to be competitive, but Durant says there is little legal recourse if something goes wrong.

WATCH | New home owners with no conditions now seeking legal recourse: 

New home owners with no conditions now seeking legal recourse for big problems, lawyer says

2 years ago
Duration 1:16
Lawyer Erin Durant says she’s seen an increase in the number of people seeking legal recourse for problems with a home after purchasing the property with no conditions.

The only way a lawyer can help a new homeowner is if they bought a property that was misrepresented in some way or if there was any fraudulent concealment of issues with the home.

Durant also said buying without conditions can present serious implications for financing if things fall through.

"Not only do you not get the home, you might face a lawsuit because you're in breach of your agreement to buy the property," she said.

Rolling the dice

In September Scott Fulton, 26, and his fiancée purchased their first home in Winchester, southeast of Ottawa, with no conditions.

About two weeks ago, during their final walk-through, they found pools of water in the basement.

WATCH | In booming real estate market, hopeful buyers face a choice: 

In booming real estate market, hopeful buyers face a choice — no conditions or no home

2 years ago
Duration 1:12
Scott Fulton, who bought a house with his fiancée in September, says they put no conditions on their offer in order to be competitive, only to find water in the basement after the offer was accepted.

Fulton said a sump pump had failed and he was able to get the seller to replace it before move-in, but now the water is back, and isn't going away.

If he could do it again, Fulton said he wouldn't change anything because placing an offer with no conditions was a calculated risk based on the knowledge the property had a brand new well and septic system.

"If the market was what it was five years ago, we probably would have had conditions put in ... but with the way it was, you weren't going to get in with all those conditions," he said.

Scott Fulton, 26, said he bought his first home with no conditions but now has water in the basement. (Robyn Miller/CBC)

Most properties sell without inspection

Only about 5 per cent, or one in every 20 properties in Ontario are currently inspected at any point before or after the sale, according to Len Inkster, executive secretary of the Ontario Association of Certified Home Inspectors.

He said from a business perspective, he and others in his industry are hurting, but buyers also pay the price.

Inkster said the quick pre-offer inspections are not adequate to protect buyers, and could cause them more problems.

"I tell them that they're actually better off not having an inspection than having a short scope inspection because the recourse for [compensation] after the fact is actually better," Inkster said.

Scott Fulton's basement has had water coming in, which he discovered after he purchased the home with no conditions. (Submitted by Scott Fulton)

Realtor Wendy Ronberg says she always encourages clients to do a full home inspection prior to putting in an offer with no conditions, as well as having a pre-approved mortgage and a clear idea of what they're looking for.

That could still mean some homebuyers shell out thousands of dollars for inspections on properties they don't end up winning, and eventually end up forgoing the inspections altogether.

"Unfortunately in this market people [are] willing to take risks and it's tough to be in that situation for sure, and so as an agent, I can't wait until we get to a spot where we are allowed to put conditions," said Ronberg, who works with Exit Realty Vision in Carleton Place, west of Ottawa, and oversees agents across Ottawa and Lanark County.

While some clauses can include offers to protect buyers, she said the risks mean problems can still arise.