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What Happens If You Fail a Home Inspection in Canada?

Cam McCarroll

Cam McCarroll is an avid real estate investor, host of the McCarroll Show, and founder of one of Hamilton's most value driven, award winning real esta...

Cam McCarroll is an avid real estate investor, host of the McCarroll Show, and founder of one of Hamilton's most value driven, award winning real esta...

Apr 10 6 minutes read

A home inspection is a critical part of any real estate transaction. Here are the details:

What is a home inspection?

A home inspection is an examination of a home’s condition performed by a certified inspector. It’s usually done as part of the home purchase process and is oftentimes the dependee of what’s called an inspection contingency. If a contract includes an inspection contingency, a buyer has a certain amount of time to have the home inspected and based on the results, either move forward with the purchase, renegotiate the contract, or back out of the purchase agreement.

What’s included in a home inspection? Based on the Canadian Association of Home and Property Inspectors’ 2023 National Standards of Practice, you can expect examination of the following:

  • Home structure
  • Roofing, flooring, walls, ceilings, windows, trim
  • Leaks and drainage
  • Attic and basement
  • Insulation
  • Ventilation
  • Safety features (like smoke detectors)
  • Exterior surfaces
  • Plumbing
  • Electrical systems
  • Permanently installed heating and cooling systems

What’s not included? An inspector won’t examine anything that’s hidden or not easily accessible. If the property has a swimming pool, that most likely won’t be inspected, and neither will landscaping, fencing, or outbuildings on the property (like sheds and detached garages) unless they affect the condition of the main building (for example, a tree disturbing the integrity of the home’s structure). Additionally, you might be surprised that during a standard inspection, a home inspector generally doesn’t check for:

  • Building code violations
  • Lead paint
  • Toxic mould
  • Asbestos
  • Radon gas
  • Poor indoor air quality
  • The presence or absence of pests

A home inspection also doesn’t attempt to comment on the cause of damage and doesn’t include a recommendation on whether or not to purchase a home. It’s also different from a home appraisal because it doesn’t include the value of the property. An inspector’s job is to provide a picture of a home’s overall condition so that a buyer has all the available information before moving forward with a home purchase.

Buying a home soon? Be present for the home inspection to ask questions so you can feel completely confident about the property before you purchase it.

Can you fail a home inspection?

Technically, no! A home inspector examines and reports on a home’s condition, but they don’t give a pass or fail that determines whether a home can or even should be sold.

What about the bank? Isn’t a passing inspection required to get a mortgage? Nope—and the truth is, while home inspections are highly recommended, they’re not typically required. An appraisal, however, is required before you can get a mortgage from the bank, and if a home is in poor condition, it won’t appraise high. That means that the amount a buyer can get from a bank to purchase a home is tied to its condition—just not through the home inspection.

Additionally, some consider an inspection “failed” if it turns up something that causes the buyer to back out of the purchase. For those reasons, it is important to repair and maintain your home for a smooth and top-dollar sale.

It’s important to recognize that every home inspection is likely to turn up something, and that home inspection reports can be long and overwhelming. The report will include a lot of details, and every “problem” that the inspector sees will be noted—from huge issues like a cracked foundation to tiny details like chipped exterior paint. Whether you’re the buyer or the seller, you can eliminate some of the stress attached to this by going over it unemotionally and categorizing issues by their importance to you. Your real estate agent will be an excellent resource for doing this, as they’ve seen many of these reports and they know how to parse them.

What are common home inspection dealbreakers?

Selling soon? These issues can cause buyers to renegotiate contracts or leave purchase agreements altogether:

  • Foundation issues
  • Major roof repairs
  • Flooding
  • Bad plumbing
  • Old electrical systems

Why are these frequent dealbreakers for buyers? Those elements can cost tens of thousands to fix, not to mention the time it will take to fix them. Even if the problem doesn’t ruin a sale, these and other issues can cause a buyer to renegotiate, including asking the seller to make repairs before the purchase goes through or reducing the offered purchase amount.

How do you prevent this? Your best bet is to make sure your home is in its best possible condition before putting it on the market. Additionally, try getting a pre-listing inspection to find out exactly what buyers will see when they inspect your home.

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