Buying an Ontario Home in a Floodwater Zone

That pastoral ravine winding past your new backyard is a joy to behold — who knew you were buying a home in a floodwater zone, and it would be underwater soon? Of all the home buying mistakes to avoid, this is a big one.

New Home Buyer Surprises

The seller for one. Odds are the previous homeowner was well aware of the floodplain where your home is located. Their home insurance rates likely reflected the sorry state of their waterlogged address. Just living in a flood zone can make it impossible to get homeowner’s insurance. 

Mortgages for a Home in a Flood Zone

Without property insurance, you may not get a mortgage, or be refused a mortgage renewal when the flood zone comes to light. Unless you have cash, your new home purchase could go out the window with your shattered dreams.

How private mortgages work. 

Flooding and Ottawa Home Buyers

When it rains, it pours in Ottawa. The Ottawa River topped its banks again last year. So much for the “once-in-a-hundred-years” washout media called it in 2017. (Actually, the capital city has seen seven major floods since 1909.) As Ottawa home buyers have discovered, mortgage lenders can’t protect their investment unless you can get full replacement value after a damaging storm. When flooding is a regular event, overland flood insurance may be a pipe dream.

A River Runs Through Your New Home

Oh, those heart-sinking moments when everything starts to leak, and you remember you bought a home in a floodwater zone. If it happens too often, your homeowner’s insurance may be cancelled, reduced or go through the roof (if you don’t) when you renew. Damages to a home in a floodwater zone are neither sudden nor incidental, the two events householder insurance generally protects you for.

Common Home Buying Mistakes to Avoid

What you should avoid when buying a house probably won’t be a surprise by now. The four most common mistakes homebuyers make:

  1. Your semi-detached is a potential disaster in a severe rainstorm. Your home inspector didn’t verify if you were buying a home in a floodwater zone. Read more if you think a home inspector may be liable. 

  2. You never did get the seller property information sheet (SPIS) — it’s optional.

  3. You made a firm offer, no conditions required, and you can’t get out of it.

  4. You left getting an insurance binder to the last minute. The premiums and deductibles are more than you bargained for (if you can get insurance). Sure enough, overland flooding from that pastoral ravine isn’t covered.

Questions to ask about insurance for a home in a floodwater zone. 

So You’re a Victim of Home Buying Mistakes to Avoid 

In the heat of the moment, when sales offers are flying fast and furious, it’s easy to overlook essential details. Revisiting the agreement of purchase and sale after the pressure’s off can be helpful. The seller may have listed past flood damage. If you’re an inadvertent victim of the most common home buying mistakes to avoid, make your next visit to an Axess Law real estate lawyer.

Disclosure and the Law in Ontario

What should I look for when walking through a house? Two points to know:  

  1. Sellers may not have to disclose their home was flooded if there isn’t any hidden damage. 
  2. You may not have a legal case. 

For example, a heavy rainstorm, burst water main or sewer back up occurs, but the seller fixes the damage or pays to have it cleaned up. You see a water stain on the wall, but accept their explanation. That’s called a patent defect. . You have no legal recourse if you saw it, and bought the home anyway. Glossing over visible defects is just another of those home buying mistakes to avoid.

4 things to look for when walking through a house. 

Sellers’ Obligations for Hidden Flood Damage

Hidden water damage is more serious. Latent defects, as they’re called, need to be disclosed, typically on the seller property information sheet (property disclosure statement if you’re from outside Ontario). The SPIS is prepared when a seller lists their home. Your realtor can get you a copy. Be leery if the realtor is evasive (see #2 on our list of home buying mistakes to avoid). Be aware, however, that the SPIS is just that, only information. It’s not a warranty, but you can use it to decide whether to walk away. An Ontario court judge may ask if you reviewed it.

What to expect from your realtor.

When Home Sellers Are Liable for Hidden Damage

Canadian courts have found home sellers liable when hidden damage is revealed after a real estate transaction closed and they:

  • lied about damage, 
  • or concealed a defect on purpose.

Lead-based paint, a recent death, or untreated termites can tip the balance sheet. Flooding that caused structural damage is definitely worth hiring a lawyer. (While you’re at it, check out the area. Toronto realtors The BREL Team staked out some odd activity at a home next door to their listing, and discovered an illegal rooming house with a violent past. The potential buyer walked.) 

What Happens When Damage is Concealed

Home sellers caught red-handed may be responsible for paying damages. Only a home inspection can truly protect you though (#1 on home buying mistakes to avoid). The culprit may be off the hook if home defects are more serious than listed on the SPIS, but you can’t prove the seller knew it. 

3 Things You Can Do to Reduce Your Cost of Buying a Home

  1. Make your offer conditional on a professional home inspection.
  2. Go in low with your offer in case you need money for repairs or want to unload your purchase quickly. 
  3. Check city hall records and online flood maps, especially if:
  • a river, lake or creek runs by it
  • you are buying your first home
  • it’s a private sale
  • the home is rented
  • the owner is very old or incapable
  • it’s a bank foreclosure
  • an estate trustee is selling in “as-is condition”.

Get flood ready with these tips. 

When a deal is too good to be true, it probably is. You could be in over your head, drowning in deep waters.

Flat Fee Legal Services for Ontario Home Buyers

Axess Law Ontario can advise you on the agreement of purchase and sale for a home in a floodwater zone, or refer you to a real estate lawyer who specializes in this area if it falls outside our scope. Video calls and e-signing appointments can be arranged anywhere in Ontario, 7 days a week, day or evening. Licensed real estate lawyers are available to meet in person at any of our Greater Toronto Area or Ottawa law offices. Make an appointment by dialing toll free to 1-877-552-9377, 647-479-0118 in Toronto, or use our online booking form

Click here to learn more about Axess Law’s real estate law services.

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