Buying waterfront property can have its uncertainties. You may see a property prior to signing an agreement of purchase and sale with the vendor. You like what you see and expect that is what you will be conveyed on closing. However, before closing, there is a problem with the property and the character of it has changed. Can you refuse to close? At issue legally is whether the vendor can convey substantially what you bargained for.
A recent case illustrates the legal problem of a deficiency in a property being conveyed. The purchaser bought a property for $640,000 which contained a cottage built on the top of a steep incline that sloped down to the lake. The purchaser walked down the incline and saw a large shed at the shoreline used to store watersports equipment. Before closing, the local township issued a work order to the vendor to move the shed because it was too close to the waterfront. The purchaser maintained that the location of the shed beside the lake was of considerable importance to her. She refused to close the transaction because she felt that the relocation of the shed substantially affected her use and enjoyment of the property.
The legal test involved in cases such as this one is primarily objective but there is also a consideration of the purchaser’s subjective views. The law is summarized by one judge: “The materiality of the deficiency is to be determined essentially on an objective basis. However, this is not to say that the subjective views of the purchaser are to be ignored. Far from it. There may be instances where a certain purchaser has agreed to buy a piece of property for a specific, legitimate and bona fide purpose, only to discover that some deficiency in title will render this use impossible. Here, the purchasers’ refusal to close is neither arbitrary, capricious nor without real consequence. In this type of case, the court would still be required to look at all of the circumstances but would be entitled, in its overall assessment, to place greater emphasis on the legitimate but frustrated needs of the purchaser.”
The purchaser sued for the return of a $20,000 deposit. The vendor counterclaimed for $60,000 because the vendor later sold the property for $580,000. The purchaser testified that she bought the property for her family to enjoy over the summer months. The main focus of their outdoor activities would be centred on the dock and the waterfront. The convenience of the shed to store water skis, water toys, and other sports paraphernalia was a swaying factor to them in their decision to purchase it. Who do you think won?