While buying a house, it is important to do appropriate verifications of the property and to ask about the state of the building before signing the contract. If not, you can suddenly find yourself with lots of expenses for repairs or have to introduce costly legal proceedings.

Definition

Article 1726 C.C.Q. states that a latent defects cannot, in opposition to the apparent defect, be perceived by a “prudent and diligent buyer without any need of expert assistance.”

For example, in Patrice Toubeix et Carole Bélanger v. Frédéric Arsenault et Sandrine Chambaron[1], part of the reclamation was rejected by the Judge because the defects had been noticed by the expert or could have been perceived by a diligent examination of the building. Therefore, they were apparent. In this case, the Judge adds:

“[TRANSLATION] Even though article 1726 C.C.Q. does not require expert assistance, in some situations, a “prudent” buyer must ask for help. This is the case when a buyer who does not have any particular knowledge of buildings perceives sings of possible defects. (ex. : marks from a possible water infiltrations, cracks in the foundations… ) When no signs of possible defects are found, the Court will not demand from the buyer that he, for example, takes down the walls or digs around the foundation to check its state.”

The Judge also explains the criteria on which a decision in relation to latent defects will be based that is : the seller’s status, the buyer’s status, the kind of property, its age, the amount paid for it, the kind of defect and the parties’ behavior.

For a claim to be viable, the defect must already be present or dormant at the time of the signing of the contract.

Warranty of quality

As stated in article 1726 C.c.Q., 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 which render it unfit for use for which it was intended or which so diminish its usefulness that the buyer would not have bought it or paid so high a price if he had been aware of them.”

Therefore, the defect must be important enough to render the property useless or much diminished. The buyer will have to prove, to claim damages, that he would not have bought or paid such a high price for the property if he had known about the defect.

As explained by the Judge in Geneviève Nadon and Roberto Muzzo v. Sandro Fabrici and Margherita Racanelli[2], while talking about a foundation problem caused by a cour anglaise:

“[TRANSLATION] The defect must be grave, that is, it is so important that the buyer would not have bought or would have negotiated a lower price. It is the case, here, for the cour anglaise, but not for the cold room, because a problem which can be resolved by adding sealant at the price of 500$, is not grave. All claims concerning the cold room are therefore rejected.”

Exoneration from liability

The parties may, while concluding a contract: “[…] add to the obligations of legal warranty, diminish its effects or exclude it altogether.” (1732 C.C.Q.)

Therefore, it is possible to buy or sell a property without the legal warranty if it is specified in the contract. However, as stated in article 1732 C.C.Q. : “[…] in no case may the seller exempt himself from liability for his personal fault.”

Also, the seller cannot limit or exclude his liability if he knew or should have known the defect at the time of the sell. He may do it though, if “a buyer buys property at his own risk from a seller who is not a professional seller.” (1733 C.C.Q.)

You should note that a sale by judicial authority never includes a legal warranty (1731 C.C.Q.)

Denunciation

Article 1739 C.C.Q. states as follows:

“1739. A buyer who ascertains that the property is defective may give notice in writing of the defect to the seller only within a reasonable time after discovering it. Where the defect appears gradually, the time begins to run on the day that the buyer could have suspected the seriousness and extent of the defect.

The seller may not invoke the tardiness of a notice from the buyer if he was aware of the defect or could not have been unaware of it.”

The buyer must notify the vendor as soon as possible when he finds a defect to give the vendor the opportunity to come and verify the state of the property.

In addition to the notice, the buyer must put the vendor in default and ask him to have his own expertise made if he wants. Most of the time, both proceedings are done in the same letter. However, you need to be careful because notifying your vendor does not necessarily means he is put in default.

In Patrice Toubeix et al.[3], most of the buyer’s claims were rejected by the court since the buyers had made the repairs before notifying the vendors.

If he knew or should have known the defect, the vendor will not be able to defend by stating a late denunciation.

Claims

The amounts granted in a latent defects claim must not enrich the buyer. It is all about restoring the balance between the parties. For example, it would not be fair to order the vendor to pay to the buyer the total cost of a new roof, when it is established that, at the time of the sale, there was only three years left of useful life to the roof. A new roof has a useful life of 25 years. Thus, the judge will condemn the vendor to pay 12% of the roof, representing the three years during which the roof should have been useful.

Also, as stated in article 1728 C.C.Q., the buyer will have the right to claim for the injury caused by the situation if he can prove that the vendor knew or should have known the defect.

Finally, if the buyer proves that he would not have bought the property, had he known about the defect, he will have the right to claim the cancellation of the sell.

In conclusion, to be successful in a latent defects claim, it is important to be well prepared and to verify all the above-mentioned elements.

(1) 2006 QCCQ 2512
(2) 2012 QCCQ 828
(3) Préc. note 1