A recent CTV News story reported on the stunned buyer, who received a demand for $38,000 outstanding on the old owner’s tab, four months after completing a deal to buy the property.
“I nearly passed out,” he told the network. But the whole saga could have been avoided had his lawyer ordered a utility certificate to ensure the previous owner was up to date on payments.
A Thornhill man got an expensive lesson in the importance of utility certificate checks when the water provider for his new home came after him for the previous owner’s massive bill.
Many purchasers know that a title search is a crucial part of buying a resale home – to ensure that the property is clear of previous mortgages, liens or other debts.
But this cautionary tale shows the value of the other checks typically carried out by lawyers on behalf of their purchaser clients, double-checking the status of the vendors’ property tax, gas, water and electricity accounts.
Even in condos – where utilities are often included in monthly condo fees – it’s important to do a status certificate check, in case the building allows for separate metering to individual units.
According to CTV News, the property at the heart of the story was empty for more than a year before the buyer took possession, and he believes an unnoticed burst pipe may be responsible for the huge water bill.
“Why didn’t they do anything about it? I mean that is really, really off the charts to add up to those kinds of dollars,” he said, complaining that the utility company should have realized something was wrong long before the sale went through.
However, the water supplier hit back, claiming that is a purchaser’s responsibility to find out about liabilities associated with the property they are interested in.
The buyer told the news outlet that he is pinning his hopes on a title insurance claim to cover the full cost of the water bill.
Even if the policy pays out, homebuyers and their lawyers should not take too much comfort – title insurance claims can be a lengthy, expensive and stressful affair.
As the saying goes, an ounce of prevention is worth a pound of cure. And in this case, the fix is particularly simple: many utility and property tax certificates can be obtained quickly and cheaply online.
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