An article I read yesterday about a home buyer’s terrible experience with a major basement leak just one month after moving in raises a lot of points and points a lot of fingers, but in the end it leaves the reader confused and angry because it doesn’t answer the question: how could this situation have been prevented?

Here’s the scenario: the home buyer bought a house from a small scale developer who had previously experienced water leakage in the basement. The seller maintains that the listing agent  told him he was not obligated to disclose the problem since it had been fixed. One month after moving in, the home buyer experienced a major leak in the basement in the same area.

But the article mentions something so briefly that unless you already have the knowledge, you wouldn’t realize how essential it is. I’m talking about building permits.

First of all, it is in everyone’s best interest – including the listing agent’s – if a listing agent asks their seller not only if they obtained the required building permits for any renovations, additions or deletions, but also to see confirmation that the permits were signed off by the regulatory body (in Toronto, for example, this would be the City of Toronto Building Inspection department). In the absence of these, the listing agent should refuse to take the listing.

Secondly, the buyer’s agent should also confirm this information in the best interests of their buyer.

Last but not least, the buyer’s solicitor may have been able to prevent closing had they contacted the City regarding permits on the property. In this particular case, a regular search for open permits such as you can do in Toronto here would not have sufficed since the seller did not obtain any permits at all. But with this particular case, the absence of any permits should have raised a red flag.

It’s also important to know that if a seller has obtained permits but has not had them signed off, they should contact the City for an inspection to determine if all work meets the requirements of the permits, what might be outstanding, and how to go about fulfilling the requirements for a sign off if there is outstanding work.

Here is the full text of the article if you would like to read it.