Humber/Ontario Real Estate Course 4 Exam Practice

A salesperson has drafted a clause addressing a buyer's concern about possible water damage, stating that there will be no water seepage or damage at the time of completion. Which of the following is an issue with this clause?

1. This clause is correctly worded.

2. The clause incorrectly suggests that the seller will warranty the basement areas beyond the closing date.

3. A representation/warranty clause is the only way to handle this buyer concern.

4. The salesperson should have drafted an acknowledgment clause instead.

The correct answer is: The clause incorrectly suggests that the seller will warranty the basement areas beyond the closing date.

The clause in question is problematic because it suggests that the seller is guaranteeing a condition that may not be feasible to maintain indefinitely. Specifically, it implies that the seller will ensure there is "no water seepage or damage" at the time of completion, which can create an ongoing obligation for the seller that extends beyond the closing date. In real estate transactions, sellers typically are not held accountable for conditions that may arise after the sale is completed, as such issues can be influenced by various factors outside their control, such as weather changes, installation of new landscaping, or alterations by the buyer. This means that while the intent to address the buyer's concerns about water damage is valid, the wording creates a problematic warranty that may expose the seller to claims or legal issues after the transaction has concluded. Instead, it would be more appropriate for the clause to reflect the condition of the property at the time of transfer without implying ongoing responsibility. This ensures clarity and protects both parties from future disputes regarding post-closing conditions.