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Pamela Tebbs, in the Toronto home she moved into in 2003. She's selling the former owner's estate and the real estate agents that handled the sale.


Pamela Tebbs's dream home turned into a nightmare the minute construction workers began flushing her toilet.

The crew brought in to do some renovations to the basement and kitchen made frequent use of a toilet that for the past decade had been lightly used by an elderly woman. It didn't take long for everyone to figure out there was a major issue with the plumbing.

"There are only so many things you can do behind a bush," Ms. Tebbs said. "We realized we had a major, major, major problem."

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The case is a cautionary tale for home buyers across the Greater Toronto Area, many of whom are buying houses without bothering to do an inspection because the market is so hot. An inspection-caused delay could be the difference between securing a new home or spending the next six weekends crowding into open houses.

Others, such as Ms. Tebbs, use an inspector recommended by the person selling the home in an effort to expedite the process.

"When you're in a multiple-buyer situation and forego an inspection, you can end up with some nasty surprises," said Bill Johnston, outgoing president of the Toronto Real Estate Board. "But even with an inspection, there are things that don't get caught. It's rare, but can be troubling."

One of the biggest problems with inspections, he said, is that they are non-invasive. As such, inspectors - who are granted their designation by the Ontario Association of Home Inspectors after taking weekend courses - aren't necessarily pulling back carpets or checking behind drywall.

Another concern is that inspectors are self-regulated. If a buyer is dissatisfied, the recourse is to complain to the association. A disciplinary panel can be formed, which would examine the complaint and seek to address concerns. Homeowners shouldn't expect a refund on their purchase, however.

"If the panel decides the home inspector should be disciplined, possible penalties range from a formal warning, requiring further training, or suspension," the association's website states. "In addition, conditions or restrictions may be placed on the inspector."

Despite the home's apparent clean bill of health, Ms. Tebbs was caught in the unenviable position of owning an uninhabitable house when she took possession in 2003 after winning a bidding war. It was just one of several critical problems that would turn up within the first few months of ownership - including a basement teeming with mould- that would eventually cost about $150,000 to fix.

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She's suing the former owner's estate and the real-estate agents from Royal LePage Real Estate Services Ltd. and Re/Max Professionals Inc., who handled the sale, in the Ontario Superior Court of Justice, alleging they knew the home was susceptible to flooding and likely contained mould. None of the allegations have been proven in court.

All have filed statements of defence, suggesting that any problems were caused by the extensive renovations and landscaping Ms. Tebbs undertook after she took possession of the house.

Regardless of who is right - the picturesque South Kingsway house was just listed for $750,000. It's a fair bit more than the $395,000 she paid in 2003, but she said that after the renovations and another $100,000 for legal fees, she's just hoping to break even.

"It absolutely kills me to sell it, but the legal fees have run up and I need this nightmare to come to an end," she said. "I put everything I had into making this house livable, but I can't afford to live here any more. It's heartbreaking."

It's the second case in Ontario this year that pits a buyer against a real-estate agent who handled the sale. The province's real-estate laws dictate that a selling agent tell a prospective buyer everything that could possibly raise concerns, but the wording is vague and it's unclear just how deep the selling agent needs to delve in order to protect themselves from lawsuits if something goes wrong.

A Sudbury judge recently found in favour of Zoriana Krawchuk, awarding her $110,000 because the agent should have known that there were foundation issues at the house she sold to Ms. Krawchuk. Ms. Krawchuk didn't have the house inspected prior to moving in, but that didn't move the judge.

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"The [sellers]knew that the foundation of the house was seriously compromised and that there were ongoing plumbing problems," the judge wrote in a summary of the case. "They made incomplete disclosures. [The agent]took no steps to verify the accuracy of the information supplied by the seller or to otherwise protect Ms. Krawchuk from the adverse consequences of this inaccurate information."

Those who buy a house and undertake extensive rehabilitation face a secondary problem - when they put the house on the market they have to disclose all of the work they have done. Ms. Tebbs's listing comes with an ominous warning: "the Buyer acknowledges that the subject property has had mould abated, the foundation waterproofed inside and outside and a sump pump installed."

She's convinced the warning - not the price - is keeping buyers away. The house has been listed seven times since 2005, and she has received no serious offers. Even in a city crazy for real estate, the stigma of water damage looms large.

At $750,000, she's asking well above the $499,000 that the average detached home fetches in the city. Her price is lower than the last time she tried to sell, however, when she listed at $1-million just as the economic collapse of 2008 was gathering steam.

For that, a buyer gets a two-bedroom house on the edge of well-wooded edge of the Humber River, and a pile of receipts outlining the extensive history of repairs.

"Whoever buys this place is getting the best house in Toronto," Ms. Tebbs said. "There isn't a thimble of water getting in here, it's like a brand-new home. I wish I could afford to enjoy it after all this work has been done."

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