Can I sue a seller for undisclosed defects Alberta?

Can I sue a seller for undisclosed defects Alberta?

Short answer

Yes, you may be able to sue a seller in Alberta who failed to disclose serious defects—but not every undisclosed problem creates a claim.

The outcome usually depends on whether the defect was latent, whether the seller knew about it or was reckless, whether it was dangerous or made the property unfit for habitation, and what the purchase contract said. Alberta courts generally apply the principle of caveat emptor, meaning the buyer assumes the risk of defects, subject to important exceptions. (Lewis v Plourde, 2017 ABQB 235 (CanLII), [191])

When can a buyer sue?

A claim may be available where the seller:

• Knowingly failed to disclose a hidden defect;

• Actively concealed the defect;

• Made a fraudulent or negligent misrepresentation;

• Breached an express contractual warranty or condition; or

• Was reckless about a hidden defect that made the property dangerous or unfit for habitation. (Lewis v Plourde, [193])

A buyer generally must establish the defect, its latent nature, the seller’s knowledge or recklessness, its dangerous or uninhabitable consequences, and the buyer’s reliance on the seller’s representation or silence. (Lewis v Plourde, [208])

Latent defects versus patent defects

A latent defect is not discoverable by an ordinary purchaser exercising reasonable care during a reasonable inspection. A patent defect is visible or discoverable through reasonable inspection and inquiries. (Lewis v Plourde, [195])

Sellers generally do not have to disclose patent defects unless they actively conceal them. Buyers are ordinarily expected to investigate visible problems and ask reasonable follow-up questions. (Lewis v Plourde, [198])

For example, Alberta’s Court of Appeal treated a known foundation crack, prior water ingress, and related drainage concerns as patent where the buyers knew about the issues and had been advised that further investigation might be necessary. The sellers were not liable because there was no evidence they knew of additional hidden defects. (Kent v MacDonald, 2021 ABCA 196 (CanLII), [44])

By contrast, concealed electrical wiring, unsafe crawl-space heating, and foundation and heating defects were treated as latent where they could not reasonably have been discovered during the inspection. (Lewis v Plourde, [222])

Does “as is, where is” defeat the claim?

Not necessarily.

Contract wording matters, and an express disclaimer may allocate particular risks to the buyer. However, contractual language will not necessarily protect a seller from fraud, active concealment, or a misleading contractual representation.

In an Alberta case involving contaminated commercial land, the seller could not rely on caveat emptor after deliberately representing that the land had been remediated while withholding a report showing that substantial remediation was still required. (1234389 Alberta Ltd v 606935 Alberta Ltd, 2020 ABQB 28 (CanLII), [128], [190])

Similarly, a contractual representation that the seller was unaware of undisclosed defects capable of making a home dangerous or unfit for habitation supported liability where the sellers were reckless about serious hidden renovation defects. (Lewis v Plourde, [230])

What if the seller completed a disclosure statement?

A seller who chooses to provide a property disclosure statement must provide information honestly and accurately. A disclosure statement may create liability as a representation even if it is not technically a warranty. (Krawchuk v. Scherbak, 2011 ONCA 352 (CanLII), [68])

A general warning that buyers should conduct their own inspections does not necessarily excuse inaccurate answers. Buyers may rely on the seller’s honesty about matters within the seller’s knowledge; they are not automatically required to investigate whether the seller’s answers are truthful. (Krawchuk v. Scherbak, [84])

However, the seller’s obligation generally relates to the questions actually asked and the seller’s actual knowledge. A disclosure statement is not necessarily a guarantee that every aspect of the property is objectively problem-free. (Nixon v. MacIver, 2016 BCCA 8 (CanLII), [47])

What must the buyer prove?

A buyer’s claim will commonly turn on evidence showing:

• What the defect was;

• Why it was not reasonably discoverable before closing;

• What the seller knew or should have understood;

• Whether the seller made a statement that was false, incomplete, or misleading;

• Whether the buyer relied on that statement or omission;

• Whether the defect created danger, loss of use, or uninhabitable conditions; and

• The reasonable cost of repair or the property’s diminution in value.

In one Alberta case, the seller’s failure to obtain required permits, combined with knowledge of extensive renovations, supported a finding of recklessness concerning hidden electrical, heating, and foundation defects. The buyer recovered reasonable repair costs, but not the cost of replacing the entire home because damages could not place the buyer in a better position than if the representations had been true. (Lewis v Plourde, [230])

What damages might be available?

Depending on the facts, damages may include reasonable repair costs or diminution in value. The appropriate measure is the one that compensates the buyer without creating a windfall. (Dyte v Total Point Developments Inc, 2025 ABKB 530 (CanLII), [496])

Repair costs may be appropriate where the work is reasonable and necessary. Diminution in value may be more appropriate where the property has been sold, substantially deconstructed, or cannot realistically be repaired. (Dyte v Total Point Developments Inc, [503])

A buyer cannot automatically recover every loss connected to the property. For example, losses attributable to patent defects, unrelated problems, or an unreasonable repair decision may not be recoverable. (Cardwell v. Perthen, 2007 BCCA 313 (CanLII), [54])

Can the realtor also be liable?

Potentially. A negligent-misrepresentation claim requires a duty of care, an untrue or misleading statement, negligence in making it, reasonable reliance, and resulting damage. (Queen v. Cognos Inc., [1993] 1 SCR 87, 1993 CanLII 146 (SCC); Krawchuk v. Scherbak, [68])

An Alberta decision apportioned liability between the seller and real estate defendants where the seller’s fraudulent misrepresentations and the professionals’ failures contributed to the same indivisible loss. (1234389 Alberta Ltd v 606935 Alberta Ltd, [225])

What this means practically

A buyer’s case is generally stronger where:

• The defect was hidden and could not reasonably have been discovered;

• The seller had personal knowledge of the problem;

• The seller gave an incomplete or false answer;

• The seller performed unpermitted renovations;

• The defect created a safety risk or materially affected the use of the home; and

• The buyer can connect the seller’s conduct to the purchase and resulting loss.

A case is generally weaker where the issue was visible, identified during the inspection, disclosed in the contract, or discoverable through reasonable inquiries. (Kent v MacDonald, [44]; Lewis v Plourde, [195])

The purchase contract, disclosure documents, inspection report, photographs, repair records, permits, engineering evidence, communications with the seller, and evidence of the seller’s prior knowledge will usually be important in assessing the claim.

Berjak Law handles Real Estate law matters in Edmonton and across Alberta.

 

Berjak Law

10080 Jasper Avenue, Suite 301
Edmonton, Alberta

780-879-0200

This article provides general information and is not legal advice.