Post-Closing Issues in Real Estate Transactions

Written by Sukhman Sandhu

Sukhman Sandhu is the Founder & Managing Director of Sukh Law. Sukhman's practice focuses upon complex real estate and commercial law transactions and related litigation. Licensed to practice law in the Province of Ontario, Sukhman currently represents individuals, small businesses and large institutions and maintains a great track record of obtaining successful results.

April 18, 2024

Understanding the complexities of real estate transactions doesn’t end at closing. In fact, issues that arise post-closing can be particularly challenging for new homeowners. As a seasoned real estate lawyer in Ontario, I’ve encountered numerous cases where clients face unexpected problems with their new properties, from malfunctioning appliances to undisclosed damages. This article aims to shed light on these post-closing issues, providing guidance on how to navigate them effectively.

What Happens When Appliances Break Down After Closing?

One common concern for new homeowners is the breakdown of appliances shortly after taking possession of the property. According to standard real estate agreements, sellers often guarantee that chattels and fixtures, including appliances, are in good working order at the time of closing. However, these warranties typically do not extend far beyond that point. For instance, if a furnace or refrigerator ceases to function days or weeks after closing, the responsibility generally falls to the new homeowner, unless a specific warranty covering a longer period was part of the agreement.

Dealing with Undisclosed Property Damage

Discovering damage after moving into a new home can be frustrating and costly. In Ontario, the legal principle generally holds that the risk of loss or damage transfers from the seller to the buyer upon closing. This means that any issues discovered post-closing are likely the buyer’s responsibility, unless the seller failed to disclose known defects or explicitly provided false warranties. Buyers are advised to conduct thorough inspections and review their purchase agreements closely before closing to mitigate these risks.

The Importance of Timely Inspections and Evidence Collection

Conducting a final walkthrough or pre-closing inspection is crucial. This step allows buyers to ensure that the property’s condition aligns with what was agreed upon in the contract. If problems are identified after closing, having documented evidence like photos, videos, and expert assessments can be invaluable. These documents support claims that the issues were pre-existing, which can be crucial in legal proceedings or negotiations with the seller.

Legal Recourse and Practical Advice

If significant undisclosed issues are discovered, legal recourse might be necessary. This could involve initiating a claim against the seller if it can be proven they were aware of the problems. Engaging a knowledgeable real estate lawyer can help determine the viability of your case and the best course of action. Additionally, understanding the terms of your title insurance is essential, as you can generally file a claim with your title insurance company and obtain reimbursement for property tax arrears.

Real-Life Challenges and Solutions

In my practice, I’ve seen a range of post-closing issues, from minor appliance malfunctions to significant undisclosed damages. For example, a client once discovered that the oven in their new home was non-functional a month after closing. Unfortunately, since the warranty only covered the state of appliances at the time of closing, the repair costs fell to them. This underscores the importance of immediate post-closing inspections and setting realistic expectations about what sellers’ warranties typically cover.

Handling Minor Issues and Cost-Benefit Considerations

For minor damages or issues like leftover garbage, it’s often more practical to handle them independently rather than pursuing legal action, considering the potential legal costs and time involved. The decision to proceed legally should consider the severity of the issue and the likely recovery versus the expense and effort of litigation, especially in cases where the claim amount is relatively low.

If you require legal advice or representation with your real estate property purchase or refinancing, or have questions about residential or commercial real estate law in general, contact us at Sukh Law. Sukh Law publishes articles for information purposes only and is not intended to constitute legal advice.

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