Such a cute house and on a nice block, too. You checked the property seller information sheet and everything seemed in order. Bet you didn’t think your new home was a grow op.
No Legal Requirement to Disclose
Zhong Wei didn’t either. As he found out to his dismay in 2018, disclosure that a property was used to manufacture drugs is not compulsory. “To the best of the sellers’ knowledge and belief” means exactly that.
Where the Sale Went Wrong
When Wei spotted the property in May 2016, he made a quick offer and put down a $30,000 deposit. The sellers, Jonathan and Jacqueline Beatty, had no idea the home had been a grow op before they bought it. So when they completed the agreement of purchase and sale in 2016, they ticked off no to the illegal substance use clause. Their mistake was honest.
When a Buyer Finds Out Home Was a Grow Op
The sale would have gone smoothly if the buyer hadn’t done a bit more digging. Unfortunately for the sellers, that sleuthing turned up the former grow op. Toronto Police Service confirmed officers had seized 265 marijuana plants from the property in 2004.
Writing to a Seller to Overturn Purchase
Enter Wei’s lawyer. Attaching the June 2016 Toronto Police Service letter, his lawyer informed the seller’s lawyer of the grim facts. Wei was unprepared to complete the real estate transaction and demanded return of the buyer’s deposit. The sellers refused.
Mitigating Damages From a Failed Real Estate Deal
Declining to release Wei from the agreement of purchase and sale, the sellers accepted an offer from a new buyer. It was $86,100 less than Wei had proposed to pay. Mitigating damages when a real estate sale falls through is typically expected by Ontario courts and they took it.
Going to Court to Dispute a Real Estate Purchase
It might have stopped there if their loss hadn’t been so great. Instead, the sellers pursued Wei into Ontario Superior Court of Justice by arguing the illegal substances clause didn’t require that information be correct as of the closing date of the home sale. Only that it be accurate when the clause was signed. Wei had discovered the grow op three weeks after signing the purchase agreement.
Making the Case Against a Real Estate Transaction
The court disagreed. The judge found Wei had been induced to buy the home by believing it was clear of any drug manufacturing past. The lower price the home brought when the facts were known proved the information was important to buyers. The sellers had been reckless in not investigating the home’s past themselves. Wei was vindicated.
Losing at Ontario Appeals Court
With no deposit or home, Wei hoped to void the contract and get his money back. His fortunes were temporary. Ontario Court of Appeal overturned the judgment in 2018. Since the sellers hadn’t been aware the home had been used to grow or manufacture marijuana, they hadn’t knowingly misrepresented a “latent defect” in the home’s condition. Wei had breached the real estate contract by failing to close the sale.
Seller Can Sue if Home Purchase Isn’t Completed
The sellers not only kept Wei’s $30,000 deposit, the decision meant they could sue Wei for the difference between the deposit and their loss on the eventual sale ($86,100 – $30,000 = $56,100). Plus, they could collect court costs from Wei if they won. It was a hard (and expensive) lesson for Wei.
What is Meant by Disclosure
Ontario law doesn’t require that sellers disclose everything about a home’s history. Stigma arising from a violent death or fact a criminal lived in it can be excluded because it doesn’t affect the property’s physical state. Besides checking police records or asking the neighbours, you may not be aware a home is infamous until after you move in. Only latent physical defects the owner knows about, like a failing foundation or mouldy window sills, need be disclosed.
What to Expect From a Grow Op Home
Stigmatized neighbours are the least of a buyer’s problems. Grow-ops often have shoddy wiring, installed illegally by the owner, that bypasses the electrical meter. Stealing electricity increases profits but puts the home at risk of a serious electrical fire. As structural changes are made without building permits and code inspections, the home may be literally falling down. Toxic mould from high humidity may make the home unsafe and unhealthy to live in.
Proving a Home is Uninhabitable
The possibility your home has a checkered past is a good reason to get a home inspection before you agree to buy. You may not be able to walk away unscathed, as Wei wasn’t, but at least you’ll know what you’re getting.
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