Question of the week:

What counts as a “Significant Cost” in a home inspection?

When purchasing a property conditional to an inspection, a standard clause uses the word “significant” extra costs revealed by the inspection.

“Significant” can mean many things. How would would you quantify it?


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Nick's Response

Significant is meaningless in this context. 


This could mean anything from “more than $100” or up to “over 10% of the value of the home.” I’m exaggerating for emphasis, but on the slim chance that it has to be tested in court, it’s in both the Buyer and Seller’s best interest not to be vague.


I’m assuming that you’re the purchaser in this scenario. For our clients, and in most of the Agreements of Purchase and Sale that I’ve seen in Ottawa, we include the phrasing “at the Buyer’s sole and absolute discretion” in regard to whether the Buyer is satisfied with the results of the inspection or financing. There’s clarity to it (basically, it’s all up to the Buyer), but I haven’t seen a Seller reject an offer because of this wording, as once the condition is removed the sale is just as firm as any other wording.

My suggestion going forward is to adjust the wording of your clauses so that you are more clearly protected in the event that you need to walk away from a conditional purchase.


Source: I’m a Realtor in Ottawa, Ontario

3 Significant costs found at inspections


Roof Leaks – If a roof leak shows evidence of having gone on for a while, it may have caused other damage within the home.


Foundation problems – The cost to fix a foundation that has shifted, or worse, is still shifting, can be tremendously expensive to fix.


Old electrical – The cost with fixing or upgrading electrical systems is not the wiring, but the fact that it’s often hidden behind walls and ceilings, causing a lot of extra work to access and repair.

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