Property Damage at Closing: Who is Responsible in Ontario?

Key Highlights

• Understanding property damage responsibilities before and after closing is crucial for both buyers and sellers in Ontario.
• The Agreement of Purchase and Sale requires the seller to maintain the property’s condition until closing.
• Buyers have the right to a final walkthrough to ensure the home is delivered in the agreed-upon state.
• If damage occurs, open communication and legal advice can help protect both parties.
• Knowing legal frameworks, common types of damage, and potential recourse can help prevent costly disputes.

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Introduction

Buying a home is an exciting but complex process, especially when it comes to property condition at closing. A lot can happen between the time an offer is accepted and the day the buyer takes possession. But who is responsible if damage occurs before closing?

Whether it’s a plumbing issue, damage from a storm, or vandalism, understanding legal obligations is crucial. This guide will explain the seller’s responsibilities, the buyer’s rights, and what steps you can take to protect your investment.

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Understanding Property Damage Before Closing in Ontario

In Ontario, real estate transactions are governed by the Agreement of Purchase and Sale (APS), which legally outlines the condition the property must be in at closing. Typically, the seller is responsible for maintaining the property in the same condition as when the buyer made the offer.

But what happens if significant damage occurs before the deal is finalized? Let’s explore.

Legal Framework: What the Agreement of Purchase and Sale Covers

The Agreement of Purchase and Sale (APS) is a legally binding contract between the buyer and seller. This contract includes provisions stating that the seller must deliver the property in the same condition as when the buyer viewed it, with reasonable wear and tear expected.

If disputes arise, Ontario case law provides guidance on how courts interpret property condition responsibilities. The final walkthrough plays a key role in identifying damage before closing. If issues are found, buyers may have legal options to request repairs, renegotiate, or seek compensation.

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Common Types of Property Damage Encountered Before Closing

Property damage can range from minor cosmetic issues to serious structural problems. Below are some of the most common issues encountered before closing:

1. Water Damage & Plumbing Issues

• Leaky pipes, broken water heaters, or drainage issues can lead to flooding and mold growth.
• Unchecked water damage can significantly reduce property value and create costly repairs.

2. Structural & Drywall Damage

• Cracked walls, ceiling damage, or foundation issues can indicate underlying structural problems.
• Drywall stains or mold growth may suggest leaks or ventilation concerns.

3. Appliance & HVAC Failures

• Broken refrigerators, stoves, or heating/cooling systems can impact livability.
• Sellers are typically expected to ensure included appliances are in working order at closing.

4. Vandalism or Unexpected Property Damage

• Vacant homes can be targets for vandalism, break-ins, or weather-related damage.
• If the seller is not living in the home, extra precautions should be taken.

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Who is Responsible for Property Damage Before Closing?

Seller’s Responsibilities

In most cases, the seller must maintain the property’s condition between the time an offer is accepted and the closing date. If damage occurs, the seller is typically responsible for making repairs before closing.

• Key APS Clause: Most purchase agreements contain a clause stating that the seller must deliver the property in substantially the same condition as when the offer was made.
• If damage occurs: The seller is usually expected to cover repairs or negotiate an adjustment to the sale price.

Buyer’s Rights and Protections

As a buyer, you have several protections to ensure the property is delivered as agreed:

• Final Walkthrough: Buyers have the right to inspect the property before closing to check for new damage.
• Request Repairs or Compensation: If damage is found, buyers can ask for repairs or request a holdback on funds until the issue is resolved.
• Legal Recourse: If the seller refuses to address damage, buyers may have legal options to back out of the deal or seek compensation.

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What to Do if Damage is Discovered Before Closing

If property damage is found before closing, here’s what to do:

1. Document Everything

• Take photos and videos of the damage.
• Get written estimates for repairs from contractors.

2. Notify Your Real Estate Lawyer - that’s where we can help!

• A lawyer can help determine if the seller is responsible for repairs.
• Legal advice ensures you understand your rights and explore options for recourse.

3. Negotiate with the Seller

• Request repairs before closing.
• Negotiate a price reduction to cover repair costs.
• Propose a holdback agreement, where part of the purchase price is withheld until repairs are completed.

4. Consider Delaying or Cancelling Closing

• If the damage is severe, closing may be delayed until repairs are made.
• In extreme cases, buyers may have legal grounds to walk away from the deal.

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When to Seek Legal Advice

If a seller is unwilling to address property damage—whether by making repairs or formally documenting an agreement—it’s crucial to seek legal guidance. A real estate lawyer can help clarify your rights, determine your options, and provide expert advice on how to proceed.

In cases where property damage significantly impacts the transaction, legal support becomes even more essential. Whether you need to negotiate repairs, adjust the purchase price, or explore the possibility of terminating the deal, a lawyer ensures you make informed decisions that protect your interests.

At Zubic Law, we’re here to help. Contact us today for trusted legal support and guidance through your real estate closing.

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How Buyers Can Protect Themselves from Unexpected Damage

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1. Conduct a Final Walkthrough

• Schedule the final walkthrough as close to the closing date as possible.
• Bring a checklist to verify appliances, plumbing, walls, and major systems.

2. Secure a Strong Agreement of Purchase and Sale

• Include protective clauses that require the seller to repair damages before closing.
• Work with your lawyer to ensure clear language around property condition obligations.

3. Obtain Home Insurance Before Closing

• Ensure coverage begins on possession day in case of damage.
• Consider additional protections like sewer backup or water damage coverage.

Understanding who is responsible for property damage at closing in Ontario can help protect both buyers and sellers from unexpected issues. The Agreement of Purchase and Sale outlines key obligations, and a final walkthrough is crucial for ensuring the property is in its agreed-upon state.

If property damage occurs, seeking legal advice can provide clarity and solutions. Working with an experienced real estate lawyer ensures your rights are protected throughout the closing process.

Need legal guidance on property damage at closing? Contact Zubic Law today for expert real estate advice!

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Frequently Asked Questions (FAQs)

Who is liable for property damage discovered after closing?

Once closing is complete, the buyer assumes responsibility for the property. If undisclosed damage is found, the buyer may have legal options depending on the terms of the APS. Homeowner’s insurance may cover some repairs.

Can a buyer back out if major damage is found before closing?

If significant damage occurs before closing, the buyer may have the right to renegotiate, delay, or even cancel the purchase depending on the APS terms. Consulting a real estate lawyer is recommended.

Is the seller responsible for repairs after closing?

Generally, no—once the sale is final, repairs become the buyer’s responsibility, unless there was fraud or misrepresentation.

What if damage occurs during the moving process?

If damage happens while moving in, the responsible party is usually the moving company or the homeowner’s insurance provider.

Can closing be delayed due to property damage?

Yes, buyers and sellers can agree to delay closing until repairs are made. A holdback agreement is another option to ensure funds are available for repairs.

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