Use 2 deposits for buyer
protection
|
Mark Weisleder
|
November
11, 2013
|
Unfortunate occurrences are
taking place in the Toronto real estate market when buyers have a change of
heart after inspecting a home. The sellers are refusing to return the deposit.
Here's what is happening:
Most real estate offers in the
GTA today contain substantial deposits, in many cases $25,000 or higher. The
accepted offer is conditional on the buyer being satisfied with the results of
a home inspection report, completed by a professional home inspection company.
The buyer conducts the inspection and then says they are not satisfied with the
home, and ask for their money back. The sellers are upset, because if other
buyers hear about this, they will ask what is wrong with the house. The seller
can't answer because the first buyer does not have to give them a copy of the
inspection report.
In general, the courts have
indicated that when buyers are trying to satisfy any condition, including a
home inspection condition, they must act honestly, reasonably and in good
faith. Unfortunately this will have to be proven in court, and the result is that
a buyer's deposit could be held up for up to 2 years while this is being
argued.
Sellers are not entitled to a
copy of the inspection report unless it says so in the clause itself. In my
opinion, sellers should always include a clause in any offer that if the buyer
wants to negotiate a reduction or cancel the deal because of problems in the
inspection report, then the buyer must give the seller a copy of the report.
This will give the seller the opportunity to check this for themselves, with
their own inspector or contractor, and will be able to explain it to any future
buyer.
If the buyer does not conduct
the home inspection at all, or perhaps brings in an unqualified person to
conduct the inspection, then I believe that these might be examples of not
acting reasonably and in good faith and it would thus be difficult for a buyer
to try and cancel the agreement and argue that they acted in good faith. It is
thus very important that buyers always use qualified home inspectors to conduct
any inspection of a home.
