What Happens If You Discover Problems With Your House After Possession in Alberta?

What Happens If You Discover Problems With Your House After Possession in Alberta?

Short answer: Discovering a problem after possession does not automatically mean the seller is responsible. Alberta generally follows caveat emptor—“buyer beware”—but exceptions may apply where the problem was hidden, the seller concealed it, the seller made a false or misleading representation, or the defect made the home dangerous or unfit for habitation. (Lewis v Plourde, 2017 ABQB 235 (CanLII), [191])

Your rights will depend on the nature of the problem, what the seller knew, what the purchase contract said, and whether you reasonably relied on a representation or disclosure.

Patent defects versus latent defects

A patent defect is visible or reasonably discoverable through an ordinary inspection and reasonable inquiries. A latent defect is hidden and would not reasonably be discovered before purchase. Sellers generally do not have to disclose patent defects, although active concealment can create liability. (Kent v MacDonald, 2021 ABCA 196 (CanLII), [41]; Slevinsky v Chambul Estate, 2014 ABQB 680 (CanLII), [63])

Examples of potential latent defects may include:

• Hidden foundation deterioration

• Concealed electrical or heating hazards

• Water-infiltration problems behind walls or finishes

• Defective waterproofing or building-envelope construction

• Unpermitted work or missing occupancy approvals

• Hidden environmental contamination

The fact that a buyer noticed one visible problem does not necessarily mean that all related hidden defects became patent. In one Alberta decision, visible water entry did not make hidden membrane, waterproofing, window, and construction-detailing defects discoverable through ordinary inspection. (Dyte v Total Point Developments Inc, 2025 ABKB 530 (CanLII), [260])

When may the seller be responsible?

A seller may face liability where the evidence shows that the seller:

• Knowingly failed to disclose a latent defect

• Actively concealed the problem

• Made a false statement about the property

• Gave a misleading half-truth

• Was reckless about whether a dangerous or serious defect existed

• Breached a contractual warranty or representation

Alberta courts have recognized exceptions to caveat emptor for fraudulent misrepresentation or concealment, knowledge of a latent defect making a home unfit for habitation, recklessness concerning the home’s condition, and failure to disclose a latent dangerous defect. (Motkoski Holdings Ltd. v. Yellowhead (County), 2010 ABCA 72 (CanLII), [57]; Temple v. Thomas, 2007 ABQB 316 (CanLII), [45])

Silence can sometimes amount to misrepresentation. For example, a seller who knew about serious foundation damage, had received professional advice about it, and then covered the damage before selling was found liable despite the absence of an express false statement. (Slevinsky v Chambul Estate, [78])

What if the seller completed a disclosure statement?

A seller’s contractual answers about known defects, permits, safety, or habitability may become important evidence. If the answers were inaccurate or misleading, the buyer may have a claim for breach of contract or misrepresentation.

In one Alberta case, sellers’ failure to disclose missing permits and serious defects associated with renovations supported liability where the defects were hidden and potentially dangerous. (Lewis v Plourde, [230])

However, the buyer still generally must prove the relevant defect, its latent nature, the seller’s knowledge or recklessness, the danger or unfitness, and reliance on the representation or nondisclosure. (Lewis v Plourde, [208])

Do “as is, where is” clauses prevent a claim?

Not necessarily. Contract wording matters, but an “as is, where is” clause does not automatically protect a seller from fraud, active concealment, or certain contractual representations.

In one case, the court held that a seller could not rely on an exclusionary clause after concealing a major foundation defect. (Slevinsky v Chambul Estate, [84])

In another case, however, an “as is” agreement and detailed disclaimers were significant where the purchaser already knew of possible landfill contamination and failed to conduct recommended testing. The court also held that the known risk was not a latent defect in those circumstances. (Motkoski Holdings Ltd. v. Yellowhead (County), [67])

What if the problem involves unpermitted work?

Missing permits are not automatically a defect by themselves. They may, however, be important evidence that the seller knew—or was reckless about—the condition of renovations and whether required inspections occurred.

In Lewis v Plourde, the court found that the sellers’ failure to obtain permits and their inaccurate answers about permits supported liability for concealed electrical, heating, and foundation problems. (Lewis v Plourde, [217], [230])

A missing occupancy permit may also be significant where it reflects incomplete inspections or construction deficiencies. In a more recent Alberta decision, the absence of an occupancy permit was treated as a latent defect alongside serious hidden building-envelope problems. (Dyte v Total Point Developments Inc, [237])

Can you make a claim against the realtor?

Potentially. A realtor may be liable for negligent misrepresentation or for failing to meet applicable professional duties.

A negligent-misrepresentation claim generally requires:

• A special relationship creating a duty of care

• An inaccurate or misleading representation

• Negligence in making the representation

• Reasonable reliance

• Resulting loss

(Queen v. Cognos Inc., [1993] 1 SCR 87, 1993 CanLII 146 (SCC); Power v. Goodram, 2012 ABQB 50 (CanLII), [123])

For example, an Alberta court found a brokerage responsible where its realtor failed to investigate and disclose an unusual party-wall configuration despite receiving information that the units differed in size and layout. (Power v. Goodram, [135])

A realtor’s liability may also arise from failing to recommend independent professional advice where the circumstances call for it, particularly in a complicated environmental or commercial transaction. (1234389 Alberta Ltd v 606935 Alberta Ltd, 2020 ABQB 28 (CanLII), [192])

Can you sue the home inspector?

A claim against a home inspector depends on the inspection agreement, the scope of the inspection, and whether the problem should reasonably have been identified.

Inspections are often limited to visually accessible areas and may exclude code compliance, concealed conditions, or areas that cannot be accessed without destructive testing. In Lewis v Plourde, the inspection company was not liable because the relevant defects were not shown to have been discoverable within the inspection’s agreed scope. (Lewis v Plourde, [247])

In contrast, an engineer was found liable where the report described a substantial foundation problem as a minor flaw, failed to investigate further, and did not adequately qualify its conclusions. (Kent v MacDonald, [27])

What remedies may be available?

Depending on the facts, a buyer may seek:

• Reasonable repair costs

• Diminution in value

• Certain consequential losses

• Lost rental income in appropriate circumstances

• Rescission, meaning setting aside the transaction

The usual damages analysis aims to place the buyer in the position they would have occupied had the contract been performed or the misrepresentation not been made. Courts do not generally award the cost of replacing a home with a newer, larger, or substantially improved property. (Lewis v Plourde, [251])

Repair costs may be appropriate where they are reasonable and necessary. In another case, the court awarded foundation replacement costs and lost rental income after denying rescission. (Slevinsky v Chambul Estate, [90])

Diminution in value may be more appropriate where repairs are impractical or do not accurately measure the loss. (Dyte v Total Point Developments Inc, [500])

Rescission is discretionary and may be refused where there has been delay, the parties cannot be restored to their original positions, or the property has changed significantly. (Slevinsky v Chambul Estate, [70], [90])

Does title insurance cover the problem?

Title insurance is not generally a substitute for home, builder, or construction-defect insurance. Coverage depends on the wording of the policy and whether the issue affected title or existed as a covered risk on the policy date.

In Steer v Chicago Title Insurance Company, title insurance did not cover construction defects and resulting repair costs where title was clear and the municipal safety order was issued after the policy date. (Steer v Chicago Title Insurance Company, 2018 ABQB 28 (CanLII), [20], [29])

Title insurance may respond differently to certain title defects, registered interests, liens, or unpermitted work, but the policy must be reviewed carefully. A later-discovered physical defect is not automatically a title-insurance claim.

What should you do after discovering a problem?

Practical steps include:

• Photograph and record the condition before repairs begin.

• Keep damaged materials where possible.

• Obtain written reports from qualified contractors, engineers, or other professionals.

• Preserve inspection reports, disclosure statements, emails, text messages, listings, and purchase documents.

• Confirm when the problem was first discovered and what was visible before closing.

• Avoid making admissions to the seller or authorizing extensive repairs before understanding the evidence.

• Check whether the purchase contract contains warranties, disclosure obligations, limitation clauses, or notice requirements.

Limitation issues can arise quickly. Alberta courts have described a two-year discoverability period that may begin when the claimant knew or ought to have known of the injury, its connection to the defendant, and that the injury warranted proceedings. (Power v. Goodram, [23], [45]; Dyte v Total Point Developments Inc, [301])

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

 

Berjak Law

10080 Jasper Avenue, Suite 301
Edmonton, Alberta

780-879-0200

The legal position depends heavily on the defect, the contract, the seller’s knowledge, the inspection history, and the available evidence. An Alberta real estate lawyer can assess those issues and the available remedies. This post is general information, not legal advice.