Can I sue the seller after signing if I was satisfied with due diligence?

Signing after a clean review is not the same as giving up a claim. Whether you can sue after closing depends on the purchase agreement, on what turned out to be wrong, and on how much time the law allows. Two questions come first. Did the seller promise something in the agreement that proved untrue? And is the deadline for suing still open? Both are answered by documents and dates, not by how you felt about diligence at the time.

Start with the purchase agreement

Read the seller’s representations and warranties, the indemnity clause and any cap on what you can recover. Check whether the agreement says anything about what you knew before closing. Look for a survival period, meaning the time during which a warranty can still be claimed on, because the agreement may try to set its own deadline, within the limits the limitation statute allows. Whether your own investigation changes the position depends on that wording, so have a lawyer read it against what you found and when.

The legal deadline for suing

Limitation statutes are provincial. Under Ontario’s Limitations Act, 2002, unless the Act provides otherwise, a proceeding must not be commenced after the second anniversary of the day the claim was discovered (s.4). A claim is discovered on the earlier of the day the person first knew of the matters in s.5(1)(a) and the day a reasonable person with that person’s abilities and in their circumstances first ought to have known of them. Section 15 adds a longer outer limit, subject to its own exceptions.

Alberta’s Limitations Act (s.3(1), subject to its listed exceptions) uses 2 years after the claimant first knew, or in the circumstances ought to have known, or 10 years after the claim arose, whichever period expires first. British Columbia’s Limitation Act says that, subject to the Act, a court proceeding must not be commenced more than 2 years after the day the claim is discovered. Quebec and the other provinces have their own rules.

Agreements can change the timetable

In Ontario, s.22(1) says a limitation period under the Act applies despite any agreement to vary or exclude it, subject only to the exceptions in subsections 22(2) to (6). Some of those exceptions apply only to business agreements, defined as agreements made by parties none of whom is a consumer. A purchase agreement between businesses may fall within them, so read any clause that shortens or extends the time to sue.

If a problem surfaces after closing

Write down the date you first learned of the problem, keep the documents, and take the agreement to a lawyer promptly. A lawyer can tell you which deadline applies and what kind of claim you have. The page on what to do if you find a problem during due diligence covers the earlier stage. Some kinds of claim have their own rules in the limitation statutes, so do not assume the general two-year period is the only clock.