Dear David,

We purchased a ten-year-old home that included a legal three-bedroom basement apartment. When we viewed the property, the basement unit was occupied by several students who were scheduled to move out within days. Because the apartment was tenanted at the time, we assumed everything was legitimate and in proper working order. Prior to closing, our lawyer discovered that several inspections related to the basement apartment were still outstanding. The seller arranged for those inspections and obtained final sign-off on the building permit, which delayed closing by a couple of days.

Shortly after taking possession, we noticed water leaking from the basement shower. We hired a contractor who advised that the bathroom had been poorly installed and that most of the work would need to be redone. The seller was a contractor, though not the original builder. Given the home was sold with a legal basement apartment, can we pursue this in court? – PERMIT PROBLEMS

DEAR PERMIT PROBLEMS: A building permit, even when it receives final sign-off, is not a warranty of the quality of the work in the home. Municipal inspections take place at specific intervals during the building process and are limited in scope. Inspectors are not present throughout construction, and are not responsible for overseeing every aspect of a project’s workmanship, finishing, or installation.

Whether you have legal recourse in this case  may largely depend on how your Agreement of Purchase and Sale was written. Well-drafted agreements typically include seller representations, warranties, and clauses addressing hidden or latent defects. If those protections were included, they may provide the basis for a claim.

Your next step should be to review the purchase agreement carefully with your lawyer, to determine what representations were made by the seller and whether the defects fall within those terms. In some cases, your lawyer may also recommend having a brief conversation with the seller’s lawyer, to explore whether a practical resolution can be reached before pursuing formal action. 

If the cost of repairs are under $50 thousand, Small Claims Court may ultimately be the most practical avenue. Your lawyer can help you assess whether this route makes sense, based on repair estimates and available evidence.

PRO TIP: “Legal” doesn’t mean “well built.” A final building permit sign-off confirms the project complied with code at specific inspection stages, but does not guarantee the overall workmanship. To protect buyers, I always ensure agreements include strong seller warranties and hidden or latent defect clauses. A home inspection may uncover issues that are visible today, but the way your contract is written often determines your recourse after closing, if problems surface later. #Advice #AskDavid #TheNegotiator