What is the test for caveat emptor in real estate transactions?

Ontario, Canada


The following excerpt is from Thomas v Raynard, 2014 CanLII 68826 (ON SCSM):

35. What I take from McGrath v. MacLean, supra, is this: the majority and dissent agreed that caveat emptor is the presumptive rule and they agreed that in general a seller is entitled to keep silent and not disclose a known defect to prospective purchasers. The dissenting justice held that a tort-based duty to warn, arising from the cases dealing with inherently dangerous products, applied to real estate transactions but that such a duty could be negated by the terms of contract. The majority merely assumed the existence of such a duty for the sake of argument and without pronouncing the law to be so. The court was unanimous in holding that the scope of that duty was in any event limited to defects rendering the property uninhabitable or inherently dangerous.

36. In my respectful opinion, McGrath v. MacLean, supra, did nothing more than to leave the existence or non-existence of that limited duty of disclosure to a future case in which the facts supported such a claim.

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