Buyer Gets Frosty Welcome
A recent decision of the Small Claims Court in Winnipeg illustrates whether the buyer or seller is responsible for damage to a home, which is discovered on closing.
Hazem Alzawawy was interested in buying a small house in Winnipeg. He found a tiny 612-square-foot, one-bedroom bungalow that was described in the listing with the Winnipeg Real Estate Board as having forced air, natural gas heating.
When he inspected the house there was a furnace in the basement. He assumed it was in working condition because of the information on the listing.
There were also five or six space heaters in the house, but Alzawawy didn't think anything of it since it was not uncommon in Winnipeg to use space heaters as an additional heat source.
In February last year, Alzawawy made an offer to buy the house for $35,000. The offer was accepted and closing took place on April 1, 2007.
On the afternoon of the closing day, the buyer entered the house to find pieces of ice hanging from the faucets and the water in the toilet bowl frozen. All of the space heaters had been removed and the house was extremely cold inside.
Two days later, the new owner discovered a tiny sticker on the furnace indicating that it had been turned off two years earlier. An inspector came from Manitoba Hydro and reported that the furnace was "currently unsafe."
Alzawawy later had the furnace replaced at a cost of $2,750. The work to correct the damage caused by the frozen pipes cost $7,500.
Claiming that the seller - Amelia Mesa - left the house without a working furnace or other heat source, Alzawawy sued for the cost to replace the furnace and repair damage caused by frozen pipes.
At trial, the seller argued that the presence of the space heaters should have alerted Alzawawy to the fact that the furnace was not working, and that the doctrine of caveat emptor (buyer beware) applied to the case.
Justice Shawn Greenberg disagreed.
"In my view," she wrote, "it was reasonable for Mr. Alzawawy to assume, considering the representation in the listing agreement, that the furnace he saw in the house was working. ... I think it is reasonable for a person buying a home in Winnipeg (especially when the purchase and possession are in winter) to assume that the home has a heat source. Mr. Alzawawy was left with a home with none."
Greenberg noted the owner did not testify, and there was no explanation why the listing showed the house had forced air, natural gas when in fact the furnace had been turned off two years earlier.
In holding the seller responsible for $10,000 in damages (the dollar limit in Manitoba Small Claims Court), the judge ruled that the risk of damage passed to the purchaser at 9 a.m. on the day of closing. But since Environment Canada records showed that the temperature was above freezing on that date, she concluded that the freezing must have occurred sometime before the time of closing, "as a result of the defendant's failure to heat the house."
Several lessons may be learned from the case:
Purchase agreements should always provide for an inspection just before closing.
Always have an expert or a home inspector check the furnace and air conditioning, especially if you're buying off-season.
Make sure the purchase agreement contains warranties that the mechanical systems are in good working order.
If you're leaving the house for a holiday in the winter, remember that if the furnace fails or a circuit breaker trips or fuse blows, the heat will turn off - resulting in frozen pipes. Shut the water off at the source and turn a tap on to bleed the pressure out of the system.
Make sure your insurance policy covers damage from frozen pipes.