Sometimes, a listing tells buyers that the seller is selling the property “without legal warranty, at the risk and peril of the buyer.” This phrase may be off-putting but many buyers (especially in hot seller’s markets) take the leap regardless.
This article deals with some legalities in Quebec real estate. While I am not a lawyer, I have been selling real estate in Montreal for over a decade. The information provided below is based on my experience, but please do consult a real estate lawyer, if you find yourself in a predicament involving legal warranty.
What is Legal Warranty?
Legal warranty protects a buyer against any latent defect (a.k.a hidden defect) which existed prior to him becoming the owner. Many people will refer to buying a home with no legal warranty, as buying a home “as-is”. Unless the seller says otherwise, they automatically sell a property in Quebec with legal warranty.
For example a new homeowner is beginning renovations on his new home. He takes down a wall and finds mould behind the wall. To remedy this issue will cost him thousands of dollars. In most cases, the seller is responsible to remedy the defect.
What Kind of Defect is Covered by Legal Warranty?
The defect must be:
- Hidden and not apparent
- Unknown by the buyer
- Existing prior to the date the buyer purchased the property
Had the buyer of discovered this defect in their due diligence period, he may have cancelled the sale or insisted on a price reduction. A seller is still responsible to remedy a latent defect, even if they too were unaware of it.
Will Legal Warranty Apply if the Property was Inspected?
If a property was inspected, and the inspector did not detect any signs related to the latent defect, legal warranty applies. It is very important that a buyer gets an inspection. Imagine a new homeowner skips the inspection. Later, they go to court asking the seller to pay for a hidden defect. The judge might decide the buyer was not careful. In that case, the seller would not have to pay.
When Does Legal Warranty Expire?
So long as a buyer can prove that the defect existed prior to him purchasing the immovable, the previous owner is responsible to repair any latent defect.
Buying with no Legal Warranty
When someone buys a home “as-is,” it means they accept it just the way it is. If they find a hidden problem later, they have to fix it themselves. The buyer and seller must clearly say in the papers that the home is being sold without any promises about its condition.
The Seller’s Declaration
A seller must tell the buyer about any problems with the home. These problems could make the home worth less. If the buyer proves the seller knew about a problem but didn’t say, the seller must fix it. This is true even if the home was sold “as-is.”