(Please note that the following is based on my informed opinion as a real estate broker and should not be taken as legal advice.)
You bought your dream home but now that you’ve moved in, you think it may have a defect. What do you do??
The first thing to do is determine whether you bought the property WITH a legal warranty or WITHOUT a legal warranty. For the purpose of this article, we’ll be looking at properties WITH a legal warranty. For information about properties sold WITHOUT a legal warranty, please check out our March 2023 article: Legal Warranties in Quebec.
Unless otherwise agreed to in your contract of sale, a property sold in Quebec is presumed to have been sold with a Legal Warranty of Quality. According to Article 1726 of the Code Civil du Quebec, “The seller is bound to warrant the buyer that the property and its accessories are, at the time of the sale, free of latent defects.”
What is a latent defect?
According to the Code Civil du Quebec, a latent defect is an issue with a property (the immovable) that is
- Present at the time of purchase but is unknown to the buyer, seller or building inspector;
- Not apparent at the time of the purchase;
- Is serious enough that, had they known about it, the buyer would not have purchased the property OR would not have paid such a high price for it.
As a homebuyer who has discovered what could be a latent defect, you will have to prove that the problem existed at the time of purchase, which isn’t always easy. You’ll most likely have to rely on an expert to provide an analysis of the problem – including how serious it is and how long it may have been going on (for example, a small leak in a bathroom pipe that has caused the floor joists to rot over several years, affecting the structure and safety).
In addition, a latent defect is one that wouldn’t have been apparent at the time of purchase. However, the law does require buyers to take precautions when buying a home – a vendor can’t be liable if the issue could have been found by a prudent buyer carrying out an inspection of the property.
Finally, a latent defect has to be serious enough that it reduces the value of the immovable, that it renders it unfit for the use it was bought for, or that the buyer wouldn’t have bought it or paid the price they did for it.
At the time of sale, the listing broker will have the home seller complete a Seller’s Declaration, which is a required form used to disclose information about the home, such as the year it was built, what renovations have been done, and if there have been any problems with it. It’s important for the seller to fill out the Seller’s Declaration in as much detail as possible, without leaving anything out. Omitting information can have serious repercussions later on.
For a buyer, the process of discovering a hidden defect, having it fixed and getting compensation for it can be long and expensive, especially if you have to go to court. So it’s no surprise that it’s one of the most common concerns home buyers express to me, their real estate broker.
You can’t guarantee that you’ll never run into a problem, but there are steps you can take to help avoid one:
- Read the Seller’s Declaration carefully and ask questions if you aren’t sure about something.
- Have an inspection carried out by a reputable Home Inspector. While they can’t open up walls or pull up flooring to look for defects, they are trained to look for signs that could indicate that there’s an underlying problem. If they see anything concerning, they’ll recommend you hire an expert to come and take a closer look before you buy the property.
What do you do when you discover a latent defect?
First, document everything. Take photos and/or video of the defect and the related damage. If you have to go to court, this will help the judge to make their decision.
Next, hire an expert to do a thorough analysis and to give you an estimate of the cost to repair the defect.
Send the previous owner a registered letter advising them of the defect within a reasonable amount of time after finding the defect (Article 1739 of the Code Civil du Québec) and giving them an opportunity to have the defect inspected. I always recommend consulting with a lawyer for help drafting the letter.
It’s also a good idea to check with your real estate broker to see if they have an insurance program that might be able to help you. I offer qualifying clients Royal LePage’s Protection Royale, which provides insurance and legal advice relating to latent defects for a year after purchase.
Ideally, you’ll be able to come to an agreement with the seller to have the defect fixed. Failing that, you would have to take legal action and present your case before a judge. Be aware, however, that pursuing legal action can be time consuming and expensive, so make sure you have a strong case.
It’s worth noting that, should you win your case against the previous owner of your home, if they can prove that the defect existed when they purchased it, they can pursue the previous seller for damages. And there’s no limit to how far back previous owners can go, provided there’s evidence of the defect existing.
Your real estate broker is there to guide you through the home-buying process, so don’t hesitate to ask them about latent defects and how to mitigate the risks.
NB The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.