The legal warranty: Protection against hidden defects
Last updated on March 12, 2024
Some people have nightmares about hidden defects. But a better understanding of the legal warranty could help make sure they get a good night’s sleep. Above all, it means buyers can look for their dream home with peace of mind.
Here's what you need to know about the legal warranty and the protections it provides.
Summary:
- What is the legal warranty in real estate?
- Definition of a hidden defect in a home
- Two levels of protection for a home's legal warranty
- How long does the legal warranty on a house last?
- Seller's declaration
- Inspection report
- Selling with or without legal warranty?
What is the legal warranty in real estate?
Provided for in the Civil Code of Québec, the legal warranty offers the buyer protection in the event of hidden defects, i.e. defects or problems with the property that may not have been detected at the time of sale. This guarantee comes automatically - you don't even need to include it in the offer to purchase.
Definition of a hidden defect in a house
A defect is a fault in the property, a material deficiency or irregularity which has a negative effect on the normal use of the property and which results in that use not being that envisaged by a reasonable buyer. The defect may be hidden from everyone's view - the selling and buying parties, as well as the inspector (if an inspection is requested as a condition) - but beware! Not every problem discovered after the sale can be considered a hidden defect. Consequently, the detection by the buyer of an unrecognized defect after signing the deed of sale does not automatically give rise to the legal warranty against hidden defects.
For example, an irregularity that has minimal or non-existent consequences on the normal use of the property is not a latent defect under the legal provisions (article 1726 and following of the C.C.Q).
For a defect to be hidden, it must be sufficiently serious, predate the sale and be unknown to the prospective owners at the time of purchase. Natural wear and tear, which occurs with the passage of time, does not constitute a hidden defect.
Two levels of home warranty protection
The legal warranty has two components: the warranty of quality and the warranty of ownership.
1. Warranty of quality
The Civil Code of Quebec stipulates that the seller guarantees to the buyer the normal quality of the goods sold. In other words, the seller guarantees that the property and its accessories are free, at the time of sale, from any latent defect which renders them unfit for use or which so diminishes their usefulness that the buyer would not have purchased them or given such a high price if he or she had known about them.
This warranty applies by default and is not linked to the good faith of the seller. However, a person who is aware of the existence of a defect and does not declare it is acting in bad faith. This may give rise to a reduction in price, damages or even cancellation of the sale.
2. Warranty of ownership
While the warranty of quality covers hidden defects, the warranty of title covers defects of title. The latter is useful, for example, to certify that the property acquired is free of any prior mortgage and that the buyer is aware of the charges imposed on the building, such as rights of way (servitude), for example.
This check is carried out by the notary involved in the transaction who, with his or her expertise in real estate law, is in the best position to answer any questions relating to the guarantee of ownership rights.
How long does the legal warranty on a house last?
The Civil Code of Québec does not set a time limit for the legal warranty. It can be said that it applies for the entire life of the property sold. Of course, for the legal warranty of quality to be activated, a defect, anomaly or fault must be discovered. The buyer must demonstrate that the defect meets the conditions set out above for it to be considered hidden under the law.
Seller's declaration
When selling with or without a real estate broker, the owner must be transparent and inform the purchasing party of any defects in the property that would prevent him or her from using it for the desired purpose, or that would diminish its value.
As a general rule, the seller's declaration is a means of ascertaining the condition of the property. It is prepared by the owner to the best of his or her knowledge. The information contained in the seller's declaration cannot be considered a hidden defect, as it is known to the buyer, who is well advised to take note of the declaration before making an offer to purchase. This will prevent them from paying unnecessary costs or being caught out if a declared problem is sufficient to prevent them from purchasing the property.
Inspection report
A professional building inspection is highly recommended when buying a new home. This will provide an inspection report, validate the condition of the property and enable the purchasing party to decide whether to acquire the building at the agreed price, propose a modification to the offer to purchase or withdraw from the process.
Does the inspector feel that the roof needs urgent repair? In this case, it will be difficult for the buyer to take recourse against the owner, as the transaction will have been carried out with full knowledge of the facts. Conversely, the presence of mold behind the walls could constitute a hidden defect.
Finally, don't forget to add the condition of inspection to any promise to purchase!
Selling with or without legal warranty?
Owners have the choice of selling with or without a legal warranty, depending on the situation of the property (e.g., a century-old building or an estate sale). He or she can partially or totally exclude the legal warranty. In the case of total exclusion, the offer to purchase and the deed of sale must include the phrase "sale without any legal warranty, at the buyer's risk".
However, a buyer who waives the legal warranty retains his or her recourse against the seller if the existence of defects affecting the property was concealed, or if misleading information was used to induce the buyer to purchase the house (fraud).
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