You just purchased your dream home. You followed all the right steps, from using a qualified broker to having an inspection. All conditions are complete to your satisfaction, possession has taken place and you are now enjoying your new home.

One day, not long after you have moved in, you are gardening on a beautiful warm sunny day when all of the sudden, as you’re digging a hole to plant your tulips, you strike oil! Not the Beverly Hillbillies’ kind of “get rich oil”, but rather the oil from a buried, leaky oil tank in your back yard that was used long ago, as part of the heating system. You bring in a city inspector, tests are performed and you find you have an environmental contamination problem in your back yard. Who do you call and who is responsible to clean up the mess and remove the tank.

If you purchased the property with warranty, the previous owner would be responsible. However, the previous owner could hold the owner before that owner, responsible. In fact, all the previous owners are responsible until you find the owner that was aware of the tank and used it, or the last live owner.

To understand what warranty or without warranty means, first know that the home inspector is only responsible for the issues in and around the house he or she can see. The home inspector is not responsible for issues they cannot see such as structural cracks, broken linings in the chimney, buried old oil tanks. The issues that can pose a problem but cannot be immediately detected are called hidden or latent defects. The seller of the home is supposed to sell the home without issues that can de-value the home or render it unliveable, unless they sold the house without warranty, as is, at the buyer’s risk.

The words sold without warranty, as is, at the buyer’s risk must be placed in the following areas:

  • The brokerage contract
  • The Centris listing
  • The promise to purchase
  • In the deed of sale

There are reasons to sell without warranty and there are cons to selling without warranty.

Reasons for buying and selling without warranty:

  • The vendor inherited the house but never lived in it, therefore does not want to be responsible for hidden defects
  • The vendor is aware the house may have hidden defects and again does not want the buyer to hold them responsible for issues that may come up
  • The vender may be leaving the country and does not want to deal with issues after they have departed
  • The buyer may intend to completely renovate the house and is not concerned with hidden defects
  • The buyer wants a lower purchase price and is prepared to take the risk of hidden defects in exchange

In most cases, where the seller lived in the house and maintained the house in good condition, the house is sold with warranty.

 

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