Renovations By Homeowner Involving Liability Risk For Defects Causing Losses to Future OwnersPage last modified: November 13 2022
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If a Homeowner Does Poor Renovation Work and Then Sells the Property, Can the Homeowner Be Found Liable By a Subsequent Owner?
A Homeowner That Does Faulty Construction Work May Be Held Liable to Subsequent Owners If Defects Rise to the Level of Posing a Real and Substantial Danger.
Understanding the Liabilities That May Arise From Poor Workmanship Within a Renovation Project Done By Owner
The principle of caveat emptor, meaning buyer beware, is commonly understood by most homeowners; and as such, homeowners often hold the mistaken belief that any defects arising within self-improvement projects are free from liability risk; however, this belief in a legal immunity for defective workmanship is incorrect.
The cases of Wesley v. Geneau, 2020 ONSC 868, as well as Mariani v. Lemstra, 2004 CanLII 50592, provide the point in law that where a homeowner takes on the role of designer, builder, or contractor, the homeowner becomes subject to the same legal duties as a commercially operating designer, builder, or contractor, owe to future property owners. The cases of Wesley and Mariani specifically state:
Duty of Care
 I find that Mr. Geneau owed a duty of care to the Wesleys. The leading statement of law regarding a builder’s liability in negligence to an owner of a building for construction defects comes from Winnipeg Condominium Corporation No. 36 v Bird Construction Co. 1995 CanLII 146 (SCC), 1995, 1 SCR 85. In the Supreme Court’s decision, La Forest J. wrote for the majority:
I conclude that the law in Canada has now progressed to the point where it can be said that contractors (as well as subcontractors, architects and engineers) who take part in the design and construction of a building will owe a duty in tort to subsequent purchasers of the building if it can be shown that it was foreseeable that a failure to take reasonable care in constructing the building would create defects that pose a substantial danger to the health and safety of the occupants. Where negligence is established and such defects manifest themselves before any damage to persons or property occurs, they should, in my view, be liable for the reasonable cost of repairing the defects and putting the building back into a non-dangerous state.
 As regards the foreseeability that negligent design or construction of a home will create defects that pose a substantial danger to the health and safety of its occupants, La Forest J. wrote:
In my view, it is reasonably foreseeable to contractors that, if they design or construct a building negligently and if that building contains latent defects as a result of that negligence, subsequent purchasers of the building may suffer personal injury or damage to other property when those defects manifest themselves. A lack of contractual privity between the contractor and the inhabitants at the time the defect becomes manifest does not make the potential for injury any less foreseeable.
 The evidence is clear from Mr. Geneau that he conceived the Property’s design and built the home acting as his own contractor, with the exception of the construction of the footings and foundation which were completed by a Mr. Nottin, whom the Geneaus had retained. This is an admitted fact.
 As a result, Mr. Geneau owes a duty of care to subsequent purchasers of the Property to construct a home that does not pose a substantial danger to the health and safety of the occupants.
 While his reasons are not as clear as they might be, the trial judge also appears to have found that the Lemstras were liable for the economic loss flowing from the negligent construction of the home. He mentioned the leading case Winnipeg Condominium Corporation No. 36 v. Bird Construction Co., 1995 CanLII 146 (SCC),  1 S.C.R. 85, and he found that there were two latent defects that rendered the house dangerous. The first defect was the centre structural wall and the second defect was the problem with the building envelope and resulting moisture and eventual mould that made the house uninhabitable.
 Winnipeg Condominium establishes that a builder owes a duty of care to subsequent purchasers. As La Forest J. stated at para. 35:
[I]t is reasonably foreseeable to contractors that, if they design or construct a building negligently and if that building contains latent defects as a result of that negligence, subsequent purchasers of the building may suffer personal injury or damage to other property when those defects manifest themselves. A lack of contractual privity between the contractor and the inhabitants at the time the defect becomes manifest does not make the potential for injury any less foreseeable. Buildings are permanent structures that are commonly inhabited by many different persons over their useful life. By constructing the building negligently, contractors (or any other person responsible for the design and construction of a building) create a foreseeable danger that will threaten not only the original owner, but every inhabitant during the useful life of the building [emphasis added].
 However, a claim for defective construction is a claim for purely economic loss, and recovery under the Winnipeg Condominium is subject to an important caveat. The structure must be dangerous, not merely shoddy, and it is only the cost of repairing the structure and restoring it to a non-dangerous state that is recoverable: see Winnipeg Condominium at para. 12.
[T]he degree of danger to persons and other property created by the negligent construction of a building is a cornerstone of the policy analysis that must take place in determining whether the cost of repair of the building is recoverable in tort. As I will attempt to show, a distinction can be drawn on a policy level between "dangerous" defects in buildings and merely "shoddy" construction in buildings and that, at least with respect to dangerous defects, compelling policy reasons exist for the imposition upon contractors of tortious liability for the cost of repair of these defects.
 The Lemstras submit that the trial judge erred in three ways. First, they submit that the Lemstras owed no duty of care to Mariani sufficient to sustain liability for negligent construction. The Lemstras were not commercial builders. Unlike the commercial builder in Winnipeg Condominium, they were not building the house with the intention to sell it. The Lemstras built the home as their "dream home" with the intention to live it in indefinitely. It was only when their economic situation took a turn for the worst that they decided to sell.
 I do not agree with this submission. Anyone who builds a home for their own use must be taken to know that that their circumstances may change and that, someday, they may have to sell it. As the passage I have quoted above indicates, the duty is imposed not only upon building contractors, but also upon "any other person responsible for the design and construction of a building". See also Perell, supra at 143: "…[A] vendor who is also a builder assumes the same responsibilities as a third party builder."
 The Lemstras' second ground relates to the question of dangerousness. They submit that while the centre wall was unstable, the house was not dangerous in the sense that there was any risk to personal safety or of imminent collapse. The trial judge found that the defective centre wall "rendered the premises dangerous" but then added:
The various experts apparently did not conclude that it was unsafe in the sense that the house was likely to collapse but it is clear from that same evidence that the centre wall deficiencies made the house susceptible to movement or shifting in any significant wind, or as the case may be, snow load.
 The trial judge also found that "the proliferation of mould … presents a danger to the occupants of the house." The Lemstras argue that the toxic mould only developed after Mariani failed to take meaningful remedial steps to prevent the penetration of water into the house despite the advice of her own experts. The Lemstras say that even if the building envelope was defective, the defects could have been remedied at a much lower cost if the problems had been tackled in a timely fashion. The trial judge rejected the contention "that the proliferation of mould was simply a lack of maintenance by the plaintiff or indeed one that even now can be remedied". When it came to considering whether Mariani had acted reasonably to mitigate her damages, he found that, "[c]ertainly in the best of all worlds, in 1993 she could have spent substantial money to correct the problem but I cannot say that by acting as she did that she failed to mitigate the damages as a reasonable person might".
 I would not interfere with the trial judge's findings with respect to dangerousness. There was expert evidence that the centre wall was unstable and dangerous within the meaning of the Ontario Building Code, R.R.O. 1990. While those same experts agreed that there was no danger of imminent collapse, there was evidence that the defect made the building unstable and that, if not repaired, it might collapse under a heavy snow load and that if not repaired, "a catastrophic condition may prevail". Similarly, with regard to the problem with the building envelope, it is evident from what has actually happened that if not remedied, the entry of water into the structure can lead to a condition hazardous to health and to property in the home.
 In my view, the evidence on both defects is capable of bringing the case within the Winnipeg Condominium principle. That case does not require the level of immediate danger suggested by the argument advanced by the Lemstras. The operative principle is explicitly preventative. Recovery for the economic loss of repair is allowed to avoid the greater cost of recovery for personal injury should the danger materialize and this must mean that the plaintiff is entitled to claim for the cost of repairs required to avoid the danger and to prevent it from occurring. La Forest J. stated at paras. 36-37:
If a contractor can be held liable in tort where he or she constructs a building negligently and, as a result of that negligence, the building causes damage to persons or property, it follows that the contractor should also be held liable in cases where the dangerous defect is discovered and the owner of the building wishes to mitigate the danger by fixing the defect and putting the building back into a non-dangerous state. …
As per the Wesley and Mariani cases, both citing Winnipeg Condominium Corporation No. 36 v. Bird Construction Co.,  1 S.C.R. 85, a homeowner who acts as a contractor becomes liable for negligent workmanship to future owners. Interestingly, per the cases, the defects must pose a "real and substantial danger", rather than just being "shoddy", for liability to arise.
Property owners who act as contractors by performing project construction work may be held liable for workmanship defects if sued by a subsequent owner. This liability may arise despite the general principle of law known as caveat emptor, meaning buyer beware, being applicable to realty transactions.