Ice Ice Baby: Keeping Your Cool When Pipes Freeze Before a Home Sale

By Sawyer Fobert and Slonee Malhotra

Vacant home slumber, thermostat too lazy,
Temperature dips and the situation gets crazy.
You’re staring at damage, repairs on the daily,
Thinking: “Do I tell the buyer?"
Hmm .. Maybe!

In the final weeks before a real estate closing, unexpected property damage can create a stressful dilemma for sellers. During the winter, I most frequently receive phone calls from sellers to the effect that the pipes have frozen and burst. This occurs more often where the property is vacant prior to closing and the thermostat fails or inadvertently drops to an energy savings program, dropping the temperature to around 17 degrees (too cold).

This begs the question: is the seller required to disclose this series of events to the buyer before closing? Sellers typically would not need to disclose the leaks and subsequent repairs. However, if the Agreement of Purchase and Sale (“APS”) has stringent disclosure requirements, or the seller provided a Seller Property Information Statement (“SPIS”), disclosure may become required. Also, the seller also cannot lie about the repairs made to the property if asked directly by the buyer or the buyer’s representative. A real estate lawyer can help you review the disclosure requirements outlined in your APS and/or SPIS if you as a seller are unsure how to proceed.

In Ontario, caveat emptor, or buyer beware, is the default framework in residential real estate transactions – it is the buyer’s responsibility to identify issues in the purchase property. There are exceptions to this general rule: sellers are required to disclose to the buyer any latent defects that are known to the seller that render the property uninhabitable, dangerous, or potentially dangerous; sellers are not allowed to conceal known defects; and sellers cannot remain silent if asked about the issue.[1][2][3]

A latent defect is a physical fault in the property that cannot be discovered through an ordinary inspection.[4] For example, existing cracks in pipes may be a latent defect, because they are a physical fault in the purchase property and are not discoverable through an ordinary inspection because they are contained behind the walls.  A seller only has to disclose a latent defect that the seller knows about and which renders the property uninhabitable, dangerous, or potentially dangerous.[5]

In cases where the plumbing has failed, and the seller has remedied the “defect”, the seller likely does not have disclosure obligations for several reasons:

1. When the seller hires qualified professionals and reasonably believes that the pipes have been fixed, there is no known defect to the seller at the time of closing. As you recall, the seller has to know of the latent defect to potentially trigger disclosure requirements.[6]
2. Where the seller does not know of a defect, it follows that the seller cannot be deemed to have concealed a defect. By way of example, if there were still leaking pipes, and right before the final walk through the seller dried up all the water in an effort to hide the problem from the buyer and/or inspector, the seller would likely be deemed to have known about the defect and found liable to the buyer for concealing it.
3. Even if the repaired pipes were found to be a latent defect, it is unlikely that fully repaired burst pipes and the remediation of any resulting water or property damage could be defined as dangerous, potentially dangerous or rendering the purchase property uninhabitable.

   Courts have found the following categories to be uninhabitable, dangerous or potentially dangerous:

   1. A cockroach infestation so extensive that it renders the property uninhabitable[7]
   2. The property being subject to radioactivity[8]
   3. Extensive fire damage[9]
   4. Toxic mold[10]

A fully repaired and functioning plumbing system is not analogous to these categories – there is no known threat to the purchase property or its inhabitant’s health.

It is imperative to note that while the seller may not have a duty to disclose the repairs, if the seller is asked about the issue, the seller is not permitted to lie or mislead the buyer. Otherwise, the seller may be liable to the buyer for negligent and/or fraudulent misrepresentations.

It is always prudent to have a real estate lawyer on your side to help navigate these disclosure requirements. A real estate lawyer will also help ensure that you don’t become liable to the buyer for misrepresentations and that you don’t contravene the provisions in the APS or SPIS.

Contact our Real Estate Team today for more information.