Condition of property
A vendor is only obligated to disclose latent defects in the title of the property. Should the purchaser discover a latent defect after settlement, they have the right to rescind a contract or sue the vendor for damages. An example of a latent defect is an unregistered easement, or covenant.
If a purchaser is dissatisfied with the general physical quality of a property, in the absence of fraudulent concealment or misrepresentation, they will not have a right to void a contract of sale. Furthermore, the vendor is not obligated to rectify defects that could have been discovered prior to entering into the contract. A vendor’s obligation is limited to delivering the property to the purchaser in the same condition it was in when the contract was entered into.
Consequences of failure to settle
If one of the parties to a contract of sale fails to settle on the settlement date, they will be in breach of that contract. While the vendor has the right to sue the purchaser, in practice this right is rarely exercised. It is more likely that the vendor would rescind the contract and keep the purchaser’s deposit.
If the vendor fails to settle, the purchaser can also sue for damages under contract law. However, purchasers should remember that the level of damages is related to the size of the loss suffered by an innocent party. As purchasers have never taken possession of a property, courts are reluctant to award liquidated damages in this situation.
If the vendor defaults and settlement occurs late, the purchaser is entitled to compensation for reasonable expenses. This will include items such as additional rent.
Conversely, if the purchaser is in default, the vendor will be entitled to compensation for reasonable expenses as well as penalty interest on the funds owing. This is usually a percentage of the full purchase price for each late day.
Mis description of measurements on the Certificate of Title
If a purchaser discovers after settlement, that the physical boundaries of the property do not accord with those specified on the Certificate of Title, they will not have the right to rescind the contract. Matters such as this should have been discovered by a purchaser prior to entering into a contract of sale.