Manitoba couple has little recourse in house nightmare

For sale: cozy two-bedroom home just minutes from the beach. Black mould, caving-in walls and crumbling foundation included.

That's the property in Matlock, Man., that will be up for grabs in a foreclosure sale at the end of this month.

It's a property that Tracey Walsh and Steven Tymchuk fell in love with back in 2005.

"See that robin's nest under the awning? She's got babies in there," Walsh said. "See that sign on the door next to the nest? Our house is condemned."

It's a worst-case ending to a nightmare that began right after the couple bought the home. That's when they learned that much of it appears to have been renovated without building permits and was not up to code.

The result? Insulation made up of beach towels, vermiculite and shavings. Sewage seeping underneath the foundation. A wall caving in, partially because a tree had fallen on it two years earlier, and a roof and foundation so unstable that both could collapse at any moment.

"We were shocked, we were shocked," said Walsh.

But the real shock came when they learned there was little recourse for themsystemic checks and balances they thought were in place to protect them.

To a point, they were right. First, in most cases, the "buyer beware" rule applies: a person selling a home is not required to disclose any flaws or problems with the home.

But there's an important exception.

"The fundamental ancient rule is that the buyer is without a remedy and has to accept a property," said John Neufeld, who both practises and teaches real estate law.

"But if the defect is so serious that it renders the property dangerous, then the seller could be successfully sued."

The catch? One has to prove that the seller knew about the defects. In this case, Walsh and Tymchuk can't.

No recollection

When contacted by CBC News last week, the previous owner said he had no recollection of renovations done, with or without permits, and no recollection of any defects.

That same condition applies to the real estate agent who sold the property. Walsh and Tymchuk filed a complaint against her through the real-estate arm of the Manitoba Securities Commission.

Its conclusion was that while the agent was wrong to list the property as fully insulated on the MLS listing, she cannot be held responsible for not disclosing the other flaws of the home, as she did not know about them.

The couple's next option was to file a claim through their title insurance policy. There are policies, while not mandatory, offered to protect buyers from things like problems over the title of the property, or problems borne of zoning violations or building code violations.

"Our lawyer said, 'Why don't you try title insurance? It will benefit you,'" Walsh said.

"That's why we started right with title insurance, knowing that if there was something wrong with the home, they would hire a lawyer and take care of it. Well, right from the beginning, we've been given nothing but the runaround."

Over the years, on the insurance company's request, the couple was asked to provide proof that the home was unlivable, that the damage was due in part to work done without permits, and that they were required to repair it before they could live in it again.

They did all of that, Walsh said, but their claim was still denied.

"You know, what more can you do?" said Neufeld. "If I was the judge, I would make the natural conclusion'You gotta pay.'"

'This is devastating'

It's cases like these that, in part, have sparked a review of title insurance policies a few years ago.

A report out of Saskatchewan raised questions about the validity of these policies, noting that the companies don't disclose their premium payout ratio, how much money they pay out in claims, or how long it takes to settle a claim.

Regardless, it was the protection of last resort that Walsh and Tymchuk thought would help make right all that went wrong with the home.

Today, thanks in part to years of going into overdraft to pay for these efforts, their home is now officially in foreclosure.

"This is devastating. It is unbelievable," Walsh said.

"This was the home we were supposed to grow old in together," said Tymchuk. "That's all been taken away from us."