Montreal Lawyer discusses the ramifications of hidden (latent) defects in Quebec real estate law –

When buying a commercial or residential real estate, it is not rare that the buyer discovers a hidden defect shortly after purchase. What recourse does the buyer have according to Quebec law?

 

What is a hidden defect?

 

A hidden defect is a defect that is invisible to the naked eye.

More precisely:

1. A latent defect is a defect existing at the time of the sale.

2. It is not apparent or obvious to a prudent buyer or inspector conducting nondestructive pre-purchase routine inspection. They should not have been discovered.

3. The defect is such that it makes the building unfit for the use for which it was intended, or reduces the usefulness of it in such a way that if the buyer was aware of the defect, he would not have given such a high price, or would not have bought the building.

These three conditions or criteria must be present together to make the “problem” to be designated as a hidden defect.

 

Can the buyer sue the seller? What about the inspector who was hired to perform a pre-purchase inspection?

 

The legal warranty or guarantee against hidden defects has its origins in the Civil Code of Quebec and is automatically included in the sales act as a guarantee for the buyer. However, this guarantee may be expressly excluded, reduced or enhanced during the negotiations between the parties. Note however that a professional seller or promoter can never exclude or reduce this warranty. In any case, if the seller knew of the defect or could not ignore it, whether it is apparent or hidden, and that he failed to disclose it, it may be liable to the buyer. In addition, the seller must compensate the buyer for a hidden defect, regardless of whether or not he was aware of it before the sale. Even if the guarantee is expressly excluded, the seller remains liable to the buyer if he knew of the defect and he did not divulge the buyer before the sale.

Pre-purchase inspection

 

Although it is not required by law to conduct an inspection of a property, it is recommended to do so in order to avoid potential problems. Often the first time, the buyer does not know what to look for in assessing a property. The pre-purchase inspection that is performed is generally (and more so in the residential area) visual and non-destructive in nature. The duty of the inspector is to identify any apparent defects and ask the seller to make certain declarations in respect to the property. Also, if the inspector does not disclose obvious defects at the time of the inspection, the buyer will be able to pursue the pre-purchase inspector in a court of justice.

 

What the buyer should do?

 

When the buyer begins to suspect the seriousness of the situation, he must notify the seller in writing as soon as possible, indicate the fault of the seller and give him the opportunity to hire his own expertise and / or repair himself default or pay for it. The case law indicates that the notification period is generally not more than six (6) months from the moment the fault severity is known to the buyer. This period varies depending on the defect and whether or not it gets worse. The seller must be able to determine the severity of the defect and determine whether or not it was hidden at the time of purchase. If the time between the knowledge of fault by the purchaser and the notice given by him to the seller in this sense is too long, and the fault has been repaired, it will be difficult for the Court to assess the extent to which the seller is to blame. No repairs should be carried out until the seller has time to assess the situation. The only exception to this is if the defect is of an urgent nature.

The buyer has a period of three (3) years from the time he / she discovered the seriousness of the failure to prosecute the seller and / or the inspector for the damage. This should have result in a post-fact reduction of the selling price or the cancellation of the sale due to the severity of the defect.

 

 

SUMMARY

Procedure following the discovery of a latent defect

 

1. Immediately take pictures of the alleged defect, dating them.

2. Send a letter of formal notice to the seller, allowing him to assess the alleged defect.

3. Do not make repairs until the first measures have been met.

4. Consult a lawyer to proceed with the selection of an expert such as an engineer or an architect to jointly determine the true nature of the fault.