Buying a home in Ontario should be a fresh start, but sometimes new homeowners are surprised to find outstanding bills left behind by the seller, such as unpaid utility accounts, property taxes, or contractor invoices. This can be frustrating and confusing—especially if you assumed everything was settled on closing day. While not all leftover bills are legally your responsibility, how you choose to respond can impact your finances, time, and stress levels. Let’s look at the risks and rewards of common solutions to this problem.
One option is to simply pay the invoice and move on, particularly if the amount is small and doesn’t justify the time or cost of pursuing other options. The benefit here is convenience—you’re avoiding a legal battle or delays in service. However, the downside is that you’re covering a debt that may not legally be yours, potentially encouraging service providers to take advantage of this goodwill. Worse, if you later discover multiple unpaid accounts, you may end up with more unexpected bills.
Another route is to contact your real estate lawyer, especially if you recently closed on the home. Lawyers typically handle final account adjustments at closing, so they may have already collected money from the seller to cover outstanding amounts. In some cases, the lawyer can reopen the file, contact the seller’s lawyer, and negotiate reimbursement. This approach can yield fair results without having to escalate matters legally, but it depends on how cooperative the seller is and how much time has passed since closing.
If your home is covered by title insurance, you may be eligible to make a claim depending on the nature of the bill. Title insurance policies often protect against unknown encumbrances or liens that were not disclosed at closing—such as unpaid property taxes or construction liens. The advantage here is that if your claim is accepted, the insurer will resolve the issue and cover the costs. However, not all types of bills are covered, and title insurance companies have specific claim procedures and timelines that must be followed carefully to succeed.
Lastly, you could pursue the seller in Small Claims Court to recover the unpaid amount. This might be worthwhile if the bill is substantial and you have clear evidence that the debt belongs to the seller. Small Claims Court allows you to claim up to $35,000, and you don’t necessarily need a lawyer. However, the process can be slow, time-consuming, and emotionally draining. Even if you win, collecting the money from the seller may still be a challenge if they are uncooperative or hard to locate.
In summary, dealing with a seller’s unpaid bills after buying a home in Ontario can be frustrating, but you do have options. Each has its own trade-offs in terms of time, cost, and outcome. The best course of action depends on the nature and amount of the bill, whether you have title insurance, and how recently the transaction closed. In any case, it’s important to act promptly and keep records of all communication and payments to protect yourself.
It is important to act quickly to resolve any outstanding bills related to the property, as failure to do so could result in additional fees or legal action against you. A real estate lawyer can help guide you through the process and ensure that your interests are protected.
The content on this post is for information purposes only and is not legal advice, which cannot be given without knowing the facts of a specific situation. You should never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. The use of the website does not establish a solicitor and client relationship.