When a property changes hands in Canada, the transfer involves far more than the physical land and structures visible to the eye. Every real property sale carries with it a complex web of statements, promises, and assurances about the property's condition, history, and legal status. These representations and warranties form the backbone of the contractual relationship between seller and buyer, allocating risk and establishing accountability for matters that may not be immediately apparent during a routine inspection. Understanding what sellers must disclose, what buyers are entitled to know, and where the boundaries of these obligations lie is essential knowledge for any business owner, operator, or professional contemplating the sale or purchase of real property in Canada.
A representation in the context of a real property transaction is a statement of fact made by one party to induce another party to enter into the contract. When a seller states that the roof was replaced three years ago, or that there are no outstanding work orders against the property, or that the basement has never experienced water infiltration, these are representations. They communicate information about the property's present or past condition that the buyer relies upon when deciding whether to proceed with the purchase and at what price. A warranty, while related, operates somewhat differently. A warranty is a contractual promise that a particular state of affairs exists or will continue to exist, and if that promise proves false, the warranting party may be liable for breach of contract regardless of whether they knew the statement was inaccurate. In practice, real property purchase agreements often blend these concepts, with sellers making statements that function simultaneously as representations inducing the contract and warranties surviving the closing of the transaction.