What is Caveat Emptor?

The expression "caveat emptor" is applied when someone is buying something from another person, but it is referred to most frequently in the context of a purchase of an existing dwelling. Most of the case law surrounds what a seller has to disclose to a buyer to relieve themselves of liability.

Absent fraud, mistake or misrepresentation, a buyer takes existing property as they find it, whether it is structurally unsound, bug infested or unsuitable for habitation, unless they protect themselves with specific contract terms. Generally it is up to the buyer to make whatever enquiries they believe are material and to satisfy themselves as to the suitability of the property. A seller, and by association, the seller's agent, is generally obligated to disclose defects that are not obvious on an ordinary inspection and the seller is not entitled to cover up a defect which would have been detected on such an inspection.

Quite often a seller is presented with a Seller Property Information Sheet ("SPIS') for the purpose of disclosing information, including deficiencies, to prospective buyers. From a buyers perspective these are helpful but in our practice we caution our seller clients from doing so and caution our buyer clients from placing too much reliance on them. Whether a buyer or seller, you should have the contract reviewed by your legal counsel before you sign it to have the proper provisions included.