In the complex landscape of Canadian property sales, the transfer of a home involves more than just a change of keys. It is a legal process governed b
In the complex landscape of Canadian property sales, the transfer of a home involves more than just a change of keys. It is a legal process governed by the principles of disclosure and transparency. When a property has undergone significant structural modification, such as basement underpinning, the owner’s legal obligations change. A real estate lawyer will often advise that failing to disclose major foundation work can lead to “latent defect” claims, which are among the most expensive and stressful legal disputes in the housing market.
Many sellers ask a central question: “If the foundation is fixed, do I still need to talk about it?” In 2026, the answer is almost always yes. Underpinning is a superior structural upgrade, but it remains a “latent” feature. It is hidden behind drywall and flooring where a buyer cannot see it during a standard walkthrough. Distinguishing between mandatory disclosures and private details is essential. This understanding ensures a clean, litigious-free exit from a property.
Patent vs. Latent Defects: The Legal Standard
Canadian real estate law divides property issues into two categories: patent and latent. A “patent defect” is a problem that is visible to the naked eye during a reasonable inspection, such as a large crack in an unfinished basement wall or a broken window. Under the principle of caveat emptor (buyer beware), the seller is generally not required to point these out, as the buyer is expected to notice them.
A “latent defect,” however, is a hidden flaw that a reasonable inspection would not uncover. Because basement underpinning involves work deep beneath the floor and behind finished walls, it falls squarely into the latent category. If the original foundation issue was significant enough to make the home dangerous or uninhabitable, the law requires the seller to disclose that the work was done. Failing to do so can be interpreted as the “wilful concealment” of a material fact. This can void a sale or lead to significant damage awards post-closing.
The Role of the Seller Property Information Statement (SPIS)
In many provinces, sellers are encouraged or required to complete a Seller Property Information Statement (SPIS). This document contains specific questions about the history of the foundation, water leakage, and structural repairs. When a seller signs this form, they are making a legal representation of their knowledge. If the form asks if the home has ever had structural problems and the seller answers “no” despite having underpinned the basement, they have created a paper trail for a fraud or misrepresentation claim.
A real estate lawyer will emphasize that honesty on the SPIS is a shield against future liability. By disclosing the underpinning, the seller transfers the “risk” to the buyer. Once the buyer is informed that the work was done and chooses to proceed, they generally lose the right to sue for that specific issue later. Transparency does not just protect the buyer. It provides a definitive end to the seller’s legal responsibility for the foundation.
Proving Knowledge: The Hurdle of Litigation
For a buyer to successfully sue a seller for a latent defect, they must prove three things: that the defect existed at the time of sale, that the defect was “material” (affecting the use or value of the home), and—most importantly—that the seller knew about it. In the case of basement underpinning, proving knowledge is relatively simple. The project would have required engineering drawings, municipal permits, and significant financial investment.
When a buyer discovers undisclosed foundation work after moving in, they often perform a permit search at City Hall. If they find that a permit was issued to the previous owner for structural repairs that were never mentioned, the seller’s claim of “ignorance” vanishes. In 2026, digital records make it nearly impossible to hide major renovations. Disclosing the work upfront, along with the professional engineering reports, is far more effective than trying to hide a documented municipal record.
The Importance of Transferable Warranties
One of the best ways to navigate the legal burden of disclosure is to provide the buyer with a transferable warranty. Most reputable underpinning contractors provide a long-term warranty on their work—often 25 years or more. By including these documents in the “Buyer’s Package,” the seller turns a potential liability into a valuable asset. The conversation shifts from “there was a problem with the foundation” to “the foundation has been professionally reinforced and is guaranteed for the next two decades.”
From a legal standpoint, a warranty acts as an indemnification. It gives the new owner a path to resolution that does not involve suing the previous seller. Providing the contractor’s contact info, the final city inspection sign-off, and the structural engineer’s letter of completion builds a “wall of proof” that the work was done to code. This level of detail makes it very difficult for a buyer to later claim they were misled about the state of the home.
Title Insurance and Undisclosed Defects
Many buyers rely on title insurance to protect them against unknown issues with a property. While title insurance can sometimes cover “work orders” or “lack of permits,” it is not a catch-all for structural disputes. If a buyer sues for a latent defect, the seller cannot simply pass the buck to an insurance company. The seller remains the primary target of the litigation.
The buyer’s lawyer performs a “Title Search” during the closing process. Stalls or collapses can occur if this search reveals structural permits that contradict the seller’s disclosures. These issues often arise just days before closing. To avoid this, sellers should gather all relevant documentation early. A clear legal record of the basement underpinning allows lawyers to clear the title quickly. This preparation ensures a smooth and predictable closing date.
Transparency as a Sale Strategy
Ultimately, the goal of any real estate transaction is a clean break for both parties. In a market where buyers are increasingly cautious, being the “transparent seller” is a competitive advantage. When a property owner is open about the history of the building, they build trust with potential purchasers. They attract buyers who value the peace of mind that comes with a reinforced, professionally managed foundation.
By disclosing the basement underpinning, a seller is not just fulfilling a legal obligation. They are protecting their future financial health. A lawsuit for a latent defect can take years to resolve and cost tens of thousands in legal fees. By working with a real estate lawyer to document the history of the home correctly, a seller ensures that when the deal is done, it is truly done.
