Home Inspection Report Clause. January 2001

A recent Ontario case clarified the law relating to Home Inspection clauses. In "Marshall vs. Bernard Place Corporation", the Buyer included a condition of obtaining a home inspection report 'satisfactory to him in his sole and absolute discretion'.

The report stated that the house was 'well built, needing no major repairs'. There were however some minor deficiencies, which the Buyer was not willing to accept. The Buyer relied on the clause and wanted out of the deal. The Seller refused to refund the deposit, saying that the Buyer had not acted reasonably, honestly or in good faith.

The judge found that the clause was so broad as to come close to being an option - subject to the Buyer acting reasonably , honestly and in good faith. The judge felt that the Buyer had acted reasonably, honestly and in good faith and found in favour of the Buyer.