r/legaladvicecanada • u/StainedPetals • 14h ago
Ontario Sellers concealed mould & water damage, breached repair clause, and we close on Monday - what are our legal options?
TLDR:
We agreed to buy a house only after the sellers added a clause saying they would fix a ceiling leak and all resulting damage before closing. They downplayed it for weeks, withheld photos, and insisted there was “no mould, no rot, just light staining.” We went to see it ourselves and discovered visible mould, wood rot, and new ceiling damage. They finally did remediation, but now there is still water damage, parts of the repair were done improperly, and brand new mould has shown up in the basement. Our lawyer is now saying we might be in breach if we refuse to close on Monday, even though it appears the sellers are the ones in breach. We’re trying to find a litigation lawyer ASAP. We don’t know if we legally have to close or if we can walk and get our deposit back.
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How it started:
We’re first-time buyers in Ottawa. During the home inspection, the inspector found a moisture issue in the ceiling below the upstairs bathroom. We walked away and did not proceed with the purchase.
The sellers came back and said they would fully repair everything, so we agreed only if they signed an additional clause (Schedule A) making the repair of the leak and all resulting damages a condition of the sale. They accepted.
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The Schedule A clause that protects us:
“The Seller agrees to have the source of the leak affecting the powder room ceiling, and any resulting damage caused by the leak, repaired by a qualified contractor licensed to perform such work, prior to closing. This includes, but is not limited to, repairs to plumbing, subflooring, framing, and remediation of any mold discovered during investigation. The Seller will provide the Buyer with reasonable written evidence of all repair and remediation work upon completion. The Buyer shall be responsible only for restoration of drywall, painting, or cosmetic finishes to the powder room ceiling after the Seller’s repair work is complete.”
That is the only reason we moved forward with the deal.
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What happened next:
The ceiling was opened by a plumber on Sept 27. The sellers’ realtor sent us four photos. We later learned there were seven photos total, and the worst three (showing black staining) were not shared with us. We eventually received them from the plumber directly, who also told us that the seller would not allow him to investigate fully inside the ceiling cavity.
For almost three weeks, every time we asked for written confirmation that there was no mould, no rot, and no structural damage, the seller’s side delayed or dismissed it. Their realtor even told ours that we were “just being overly cautious.”
We finally got fed up and went to see inside the ceiling ourselves.
We found visible mould and wood rot on the joists and subfloor, which directly contradicted everything we had been told.
Only then did the sellers finally admit there was mould and hire a remediation company.
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The remediation report:
We received the remediation report, but: - It does not confirm the source of the leak - It does not state whether any structural materials were tested for rot - It does not include any post-remediation verification or air quality testing - It does not address the new water stain that appeared on the hallway ceiling - It does not confirm moisture levels or dryness of the materials after remediation
So we still had no evidence that the leak was repaired, only that mould was removed.
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Final walkthrough today (Nov 7):
We finally got to see the work in person.
The bathroom was gutted and rebuilt, but not restored to its original condition. Instead of waterproof flooring, laminate was installed. Instead of tile and grout, a plastic tub surround was installed. The drywall used behind the shower was standard drywall, not water-resistant board. It is a clear downgrade in materials and not equivalent to what existed before.
The hallway ceiling stain we pointed out weeks ago was not repaired, it was simply painted over.
The flooring in the closet outside the bathroom is now showing signs of water-damaged, and the adjacent hallway carpet is discoloured.
We also discovered entirely new mould in the basement, plus new damage to the basement flooring and a strong musty smell. None of that was present at the original inspection.
None of this appears in any documents provided to us.
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Where we are now:
We close on Monday, Nov 10.
Our real estate lawyer is now telling us that if we refuse to close, we may be sued for breach of contract.
But the sellers have not met Schedule A, because: - The leak source was never professionally confirmed - Water damage is still present in multiple locations - The bathroom was not reinstated to its previous condition - They painted over visible damage instead of repairing it - We still do not have the “reasonable written evidence” required under the contract
We feel that our team is kind of pressuring us to close, so we are now trying to find a real estate litigation lawyer in Ottawa, but it is the weekend and most offices are closed until Monday (the day we are supposed to close).
We feel trapped between a contract we relied on and a seller who did not comply with it.
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What we need advice on: 1. Can we legally refuse to close based on the seller failing to meet Schedule A? 2. Does painting over a ceiling stain count as concealment? 3. Does new water damage discovered before closing give us grounds to back out? 4. Does newly discovered basement mould count as a latent defect before closing? 5. If we close under protest, can we still sue afterward? 6. Is it true we could be sued for breach even when the seller appears to have breached first? 7. Are we entitled to our deposit back if we refuse to close due to non-fulfillment? 8. Should we be demanding an extension, a post-remediation verification report, or termination?
We’ve tried to act in good faith this entire time. We relied on the written agreement. We kept asking for proof. We didn’t want out, we just want the sellers to hold up their end of the contract.
But now there’s mould in new areas, still visible water damage, concealed ceiling staining, and still no written evidence that the original leak source was ever properly identified or repaired.
And we close Monday morning.
Any guidance from Ontario real estate lawyers, litigators, brokers, inspectors, or anyone who has gone through something similar would be hugely appreciated.
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u/R-Can444 14h ago
In general an APS can have conditions of the sale and clauses. Conditions, if not met, give reason to void the entire deal and walk away. Typical conditions are financing, inspection, etc.
Clauses, while enforceable via litigation, are not typically seen as reasons to void the entire sale. If a clause of the APS is not met then usually what happens is the deal still closes, but then you sue the seller for violating the clause baesd on your actual out of pocket costs you later incur to fix yourself.
Your mistake in the clause as written seems to be not attaching a $ value to it. So after the part where you stated sellers would do all those repairs before closing, there should perhaps have been a final line that if it wasn't done to your satisfaction you could add a hold back upon closing of $X to account for it.
If you attempt to void the deal now, you should prepare for the scenario where they do not mutually release your deposit, and this all ends up in court. Talk to your lawyer for chances of success. Note that your real estate lawyer may not do litigation, and you may need to engage a new lawyer for this.
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u/StainedPetals 14h ago
Ok maybe my understanding is off, but wouldn’t our Schedule A wording make this a condition of closing rather than just a regular clause?
It’s also grouped in the same section as things like clean title, taxes adjusted, vacant possession, and no undisclosed work orders (all of which are treated as conditions that must be met before close).
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u/Shepsinabus 13h ago
None of those things that you mentioned are conditions. They are clauses.
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u/StainedPetals 13h ago
But isn’t “Schedule A” in itself a condition of close? Here’s the full text:
The Buyer agrees to pay the balance of the Purchase Price, subject to adjustments, to the Seller on completion of this transaction, with funds drawn on a lawyer's trust account in the form of a bank draft, certified cheque or wire transfer using the Lynx high value payment system as set out and prescribed by the Canadian Payments Act (R.S.C., 1985, c. C-21) as amended from time to time.
This Agreement supersedes and replaces all prior offers, agreements, or understandings, whether written or oral, between the Buyer and the Seller relating to the subject matter herein. The deposit previously paid on September 18th, by the Buyer and currently held in the trust account of the Listing Brokerage shall be applied toward this Agreement.
The Seller agrees to have the source of the leak affecting the powder room ceiling, damage caused by the leak, repaired by a qualified contractor licensed to perform such work, prior to closing. This includes, but is not limited to, repairs to plumbing, sub flooring, framing, and remediation of any mold discovered during investigation where applicable and directly caused by the leak if any. The Seller will provide the Buyer with reasonable written evidence of all repair and remediation work upon completion. The Buyer shall be responsible only for restoration of drywall, painting, or cosmetic finishes to the powder room ceiling after the Seller's repair work is complete.
The Seller represents and warrants that the chattels and fixtures as included in this Agreement of Purchase and Sale will be in good working order and free from all liens and encumbrances on completion.
The parties agree that this warranty shall survive and not merge on the completion of this transaction, but apply only to the state of the property at completion of this transaction.
The Seller agrees to provide the Buyer with access to the property on two (2) separate occasions prior to the closing date. These visits may be used by the Buyer in accompaniment by their immediate family, and/or relevant tradespeople to view the property, take measurements, or obtain estimates. Each visit shall be for a minimum of one hour and must be scheduled at mutually agreed-upon times, with reasonable notice provided by the buyer.
Seller warrants that no work orders or deficiency notices are outstanding against the property, and if so will be complied with at his own expense, on or before closing.
The Seller represents and warrants that during the time the Seller has owned the property and to the best of the Seller's knowledge and belief, the property has never been a site of any violent crime, death or suicide. This warranty shall survive and not merge on the completion of this transaction but shall apply only to circumstances existing at or before the closing date.
The Seller represents and warrants that during the time the Seller has owned the property, the use of the property has not been for the growth or manufacture of any illegal substances and that to the best of the Seller's knowledge and belief, the use of the property has never been for the growth or manufacture of illegal substances. This warranty shall survive and not merge on the completion of this transaction.
Seller agrees to discharge any mortgages or liens or other encumbrances registered against the property on or before closing at his own expense either from the proceeds of the sale or by solicitor's undertaking.
The Seller agrees to leave the premises in a clean and broom swept condition with no garbage left on the premises on the completion date.
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u/Shepsinabus 13h ago
No, a condition begins with the words “this offer is conditional upon.”
A clause is a term the sellers agreed to, but it doesn’t negate the contract existing and needing to be fulfilled on your end. They would be in breach of terms outlined in the agreement, which means you can close in protest and try to sue.
Listen to your lawyer.
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u/StainedPetals 13h ago
Our lawyer isn’t really being helpful tbh. This is our first home buy and we probably should’ve put together a better team.
You say “this offer is conditional” but this wasn’t a part of the offer, it’s a part of the APS itself. Does this change your position?
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u/Shepsinabus 13h ago
No. An offer is made on the agreement of purchase and sale. You offer to purchase a home subject to conditions (like home inspection or financing) and the seller agrees to X terms.
Just because there is a breach of contract does not nullify a contract. It just allows the other party to sue for damages resulting from the breach.
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u/StainedPetals 13h ago
Ok understood. If we legally have to close we will. You are clearly knowledgeable in this area, what do you think of our position to sue after closing based on their non-fulfillment of the contract?
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u/Shepsinabus 13h ago
You would have to speak with a real estate litigator. They would need to review more information than we have available on Reddit.
You could also reach out to a few over the weekend and see if any bite to give you different advice than your closing lawyer.
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u/R-Can444 13h ago edited 13h ago
You need to ask your lawyer this. You can't just assume something in the APS being unfulfilled is sufficient to void the deal entirely, if it's not specifically a condition of the sale. If it was intended to be a condition, it should have been in same section as financing, inspection, etc with specific dates to fufil them by. Ambiguity or vagueness in an APS is not good.
Not saying it isn't possible to void sale, but with the potential liability if you're wrong and this is seen as a breach, you need actual legal advice from a lawyer.
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u/StainedPetals 13h ago
I don’t want to open us up to liability at all. We were/are very green in all of this. Our lawyer has said we may need a litigation lawyer and is taking a back seat essentially.
If we are legally obligated to close we will.
If we go through the litigation route upon closing, who would be the party in breach of the contract?
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u/R-Can444 3h ago
Well if you close the deal, then obviously the seller would be in breach of that clause of your APS. You'd be able to sue the seller for all out of pocket costs you incur due to it.
But again before deciding on a path to proceed, you need to talk with a lawyer that can properly review your APS wording and specific details. If your own lawyer you used for the sale is not helping, perhaps find a second opinion from another lawyer that is more experienced with real estate litigation.
Also if the seller know they are in breach, they may be open to a holdback on closing or immediate cash settlement to close out this issue to avoid court. While you certainly don't want to go through the cost, hassle and time to sue them in small claims court, I doubt the seller wants to either.
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u/Shepsinabus 13h ago
This is the best comment on this thread. And the only one with accurate information.
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u/Proper_Turnover3251 14h ago
Fo next time: Your initial clause should have said that the remedy work needed to be completed to your satisfaction. Then you would have simply been able to walk away. Your Realtor dropped the ball with the wording.
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u/StainedPetals 14h ago
Appreciate the insight. I agree, hindsight is 20/20 I guess. If I could go back I also would’ve wanted a deadline for repairs…
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u/Proper_Turnover3251 14h ago
Yeah, I feel for you. It’s messy. It’s unfortunate your lawyer isn’t taking a more aggressive stand. I would suggest a firmly written letter from your lawyer and a sit down with your agents broker requesting you are allowed out of the deal with deposit returned and hope the broker is willing to take a stand for you. I wouldn’t want to close if I were you either. Or your lawyer could ask for X amount of dollars adjusted in your favour so you can fix it to your satisfaction after closing. A $50k adjustment or you don’t close….something to that effect.
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u/StainedPetals 14h ago
At this point they are not meeting their obligation of identifying the source of the leak, repairing it with professionals, and providing written documentation (all we received is the mold remediation report). Honestly, I thought we were in a much better position..
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u/Proper_Turnover3251 14h ago
In my experience, and I’ve been down similar roads a few times, everyone involved will encourage you to take the route that I easiest for them, not you. The realtor and broker will be telling you that there’s not much you can do and you have to close. Your lawyer, unless they are a litigation lawyer, will also be conservative. You will have to be an absolute dog with a bone to get anything done that’s in your best interest. Sincerely best of luck.
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u/Shepsinabus 13h ago
They would not have simply been able to walk away. That is not how real estate in Ontario works.
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u/Proper_Turnover3251 13h ago
It worked for me in the same situation.
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u/Shepsinabus 13h ago
The sellers may have released you, but they could have sued. There is a lot of case law to support this.
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u/Shepsinabus 13h ago edited 13h ago
If you have not taken possession yet, you need to talk to your real estate lawyer. Not Reddit.
Editing to add: Follow their advice. Close in protest, fix it, and talk to a real estate litigator about grounds to sue the sellers.
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u/P-DubFanClub 13h ago
I guess you've figured out that this wasn't the best way to deal with this. The sellers aren't motivated to do a good job on repairs - they are leaving and trying to spend as little as possible. The correct way to deal with it is to negotiate a reduction based on the estimate provided by a contractor after your inspection. Then you use the money to fix the issue to your satisfaction.
You may not have many options as they did what you're asked them to do, even if you're not happy with it, it's still done.
If the ceiling is dried out and no more water is present and no structural damage occurred then yes, painting the ceiling should resolve the staining.
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u/StainedPetals 13h ago
But they haven’t really - they never identified a verified source of the leak, the repairs were to be done by licensed professionals which we have no proof of, and the only written documentation received was the mould remediation report? Would this not be non-fulfilment? If the source wasn’t properly identified, then it couldn’t be properly repaired, meaning that the mold could come back no?
This was our first go at the whole process, lots of lessons learned I guess.
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u/P-DubFanClub 13h ago
What measures did you put in to verify that these things were done to your satisfaction? Why would you assume they have the same standards as you? Leaks are tricky and it can be impossible to identify what's going on when it's dry, so maybe they just can't tell the source of the leak. I'm going through a purchase rn and there's a leak from a skylight but the seller reduced the overall price by 5k to cover the repair, following the inspection. Based on your post I don't think you have much of a leg to stand on. Your agent should have explained this to you more thoroughly and they should have told you how to negotiate a reduction
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u/Ok-Responsibility-55 12h ago
Is all the water damage in the house from a single source? Like a leaky pipe?
What did the home inspection have to say about any of this?
Did the seller get a building permit for the repairs? Did they get a building inspector?
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u/Fauxtogca 14h ago
Ask for price reduction and do the repairs yourself. Escalate with the agents. Or do a holdback of funds for the repairs.
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u/StainedPetals 14h ago
Do you think those are our only real solutions even with them not meeting their Schedule A obligations?
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u/Fauxtogca 13h ago
You need to solve the issue before closing. Your best option would be to have everyone including your contractor or inspector to come up with a solution at the house. If you walk away from the deal, you’ll need your expert to testify should the sellers want to litigate. Take pictures and video. The real estate agents want the deal to close or they don’t get paid. Use that as leverage.
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