If you're looking to buy a home, you may have encountered the term ‘non-self-occupancy clause’. You will sometimes find this clause in a purchase agreement when you buy a home. It is often stated online that the home is sold with a non-self-occupancy clause if applicable.
What does a non-self-occupancy clause mean?
A non-self-occupancy clause means that the house's seller does not live in it and therefore has no idea of any defects or hidden faults. For example, this could be the case if someone inherits a house or has a second home that is not permanently occupied. A seller may also choose to sell a house with a non-self-occupancy clause because they bought the house as an investment and are renting it out.
Impact on sellers' duty of disclosure
As a buyer, you have a right to a good home, and so the seller must report any defects or hidden flaws known at the time of sale. The home seller may not be aware of any defects or hidden flaws because the seller has thus not lived in the home recently. In doing so, the clause minimizes the sellers' duty of disclosure.
Impact on buyers' duty to investigate
If you buy a home with a non-self-occupancy clause, you are responsible for discovering any defects or hidden flaws as a buyer. Therefore, buyers need to do their research on the condition of the house before buying it. You do that with a building inspection of the house. If the seller knows about hidden defects and has kept quiet about them, he or she can be held liable for the cost of repairs. In practice, however, it is difficult to prove whether a defect in the home is known to the sellers, especially if the sellers themselves do not live there.
In combination with age clause
Older homes are often more likely to have hidden defects than newer homes because different construction techniques were used in the past. Therefore, in addition to the non-self-occupancy clause, a seller of an old house may choose to sell the house with an age clause. Defects, which are due to age, can then not be recovered from the sellers. However, combining the age clause with the non-self-occupancy clause also shields sellers from liability for defects in newly remodeled house parts that would typically fall outside an age clause.
In this way, sellers are additionally covered for liability for defects surrounding remodeling work done to the home. Of course, this makes repairs at the buyers' expense!
Obligation to investigate
As a buyer, you have a legal duty to inspect the house properly and find out as much as possible about what is happening in the neighborhood. This is known as the obligation to investigate. Continue reading →
It's dramatic to have bought your dream home and be confronted with defects. To detect defects, you can have a building inspection performed. Continue reading →
A transfer deed is a document that sets out the terms of the sale of a house. Its content largely corresponds to that of the preliminary deed of purchase. Continue reading →