Though the Small Claims Court is limited in the nature of orders it can issue (that is, it can only prescribe the return of property or repayment of up to $25,000 in damages), the nature of cases this court considers is very varied.
Cases which the Small Claims Court considers include disputes arising from real estate transactions – the purchase and sale of homes. One specific example is the use of the Small Claims Court to claim damages incurred in the course of remedying the defects discovered in the property after it was purchased from the seller.
If you are in the unfortunate situation where you have purchased a home and discovered that the property has defects which will cost you thousands of dollars to repair, there are several important points you should know before considering a lawsuit in the Small Claims Court. The nature of the defect is a fundamental consideration. There are two types of defects:
- Patent defects
- Latent defects
Patent defects are those that can be discovered during the course of an inspection, and are apparent to any buyer exercising ordinary vigilance. The seller is not under obligation to call attention to such patent defects. That is, it is up to the buyer to conduct an inspection, and make the necessary inquiries to bring patent defects to light. If he or she neglects to do so, he or she cannot afterwards sue the seller for damages resulting from such patent defects. Therefore, if, for example, the roof of the home is leaking, leaving a large, immediately and clearly visible stain on the ceiling before purchase, it would be unlikely that a buyer could successfully sue the seller for the cost of repairing the roof post-purchase (though, of course, specific circumstances of the situation must be considered every time). The court would generally rule that where the defect was so apparent, it would have been the responsibility of the buyer to notice it before purchase, independently or via inspector, and act accordingly.
Latent defects, on the other hand, are those defects which a buyer cannot bring to light with any inquiry which he or she is in a position to make before purchase, be it simple observation or a professional inspection. The seller is usually liable for such defects. This liability, however, is conditional on two more factors. In order to be liable for damages arising from latent defects, it must be shown that the seller either:
- Knew about the latent defect, which could not have been revealed even in the course of a professional inspection, and did not disclose it to the buyer, or,
- The seller took active measures to conceal the defect before the purchase was completed.
The above means that if, for example, the residence’s basement were infested with mould, and the mould stains were actively concealed, the buyer would have good chances of successfully suing the seller in the Small Claims Court for the cost of dealing with the mould.
Further to the above, there are some additional grounds on which the seller can be found liable for defects in a purchased property. For example, the seller can also be found liable if:
- The seller provided an express warranty that a house is free of certain defects, or if
- The seller fraudulently misrepresented facts relating to latent defects.
As you can see, it is important to do your due diligence when purchasing a home, but where latent defects come to light post-purchase, costing you thousands in repairs, the Small Claims Court is the forum for your claim to be heard.
Please note that the above is not intended as legal advice, and should not be considered as such. Small claims cases, especially those of such complexity as cases revolving around real estate transactions, vary greatly in detail and circumstances. For legal advice with respect to your particular matter, please contact a legal professional.