Who is responsible if damage happens to a home between purchase and closing?

April 11, 2023

In most binding contracts for real estate transactions – or agreements of purchase and sale – the seller is responsible for maintaining the property until closing. This includes repairs for any damage that may occur before the change of ownership.

However, once closing has taken place, the buyer becomes the owner and is entirely responsible for the home. If they haven’t moved in yet but the transaction has already closed and then something breaks down or gets damaged, it will be up to the buyer to take care of it.

For example, when I bought my current home in the late fall, the roof was covered with leaves. I knew that leaving them there until I took possession in the winter would cause them to freeze, which would make them very difficult to remove and possibly lead to damage. To prevent that from happening, we asked our agent to request that the seller clean the roof and leaves before it began snowing.

It is not unheard of for more substantial damage to take place after an agreement has been signed but prior to the closing date. It can happen while moving furniture or appliances when the buyer is vacating the property. Depending on how significant this damage is, here are some options a buyer has.

    • They can have the seller agree to get the repairs done and pay for that. If the work is taking longer than expected, they can try to amend the closing date until all repairs have been completed.
    • They can have the seller provide the necessary funds to get the repairs done after they take ownership. This is often done as a direct payment or as a credit toward the repairs by adjusting the sale price.
    • Depending on the severity of the damage, it may even be possible for the buyer to terminate the deal altogether. However, if a buyer is wondering about this option, they should consult with a lawyer insured to practice real estate law to fully understand the implications.

Typically, a seller will either agree to do the repairs or provide the buyer with the money to do the repairs. In the unlikely event that the seller refuses, the buyer should work with their agent and lawyer for the most viable option.

On the flip side, if the buyer is already aware that the home needs work, they should be clear on the agreed-upon terms before signing any paperwork. For example, perhaps the seller mentioned they would get the drywall redone or a room repainted. It’s crucial to make sure that those agreed-upon repairs are specifically outlined in the agreement so that the buyer can minimize the chance of any disagreements later.

I also highly recommend that the buyer check with their agent to see whether they can have an inspection conducted on the property after repairs are done and prior to the transfer of possession.

As always, if a buyer is unsure about how to proceed, I encourage them to discuss their options with their agent and seek legal counsel.

If you have a question for Joe about the home buying or selling process, please email info@jasminesaberi.ca

This column is for general information purposes only and is not meant as legal or professional advice on real estate transactions.

CC: Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO).