Latent Defect and Warranty of Quality, all you need to know

In this month’s article, Sabbagh & Associés will cover the hot topic of latent defects and the warranty of quality that typically accompanies a property. If you find yourself reading this article looking for more concise information on the subject, feel free to reach out to a real estate attorney at Sabbagh & Associés at any moment.

latent defect in house

At present, there is an increasing number of individuals entering the real estate market in Montreal. Whether for the sale or purchase of a property, be it residential or commercial, Montreal’s real estate market has heated up.

That said, the laws surrounding hidden defects or warranties of quality are for many vague and unfamiliar. Unfortunately for many, vague up until the point that it is too late and a real estate lawyer must enter the discussion.

Latent defects are a common occurrence in the real estate market and so we seek to shed some light on these defects, giving them definition and instances where you may be faced with them, in order to better help you asses your situation should ever you find yourself in a case dealing with latent defect in a home.

What should you do? Read on…

What is a latent defect?

By definition, hidden defect is an imperfection or defect in a buildings structure or surrounding structure that may affects the integrity of a building and foremost invisible at the time of purchase.

Additionally, latent defects are unapparent defects that transform the good into a place unfit for use in part or in whole or that diminishes the value .

To properly assess or confirm there is a hidden defect in a building it is wise to consider the services of a professional. The expertise of a professional qualified in the assessment of residential and/or commercial properties is legally very useful in order to ascertain if a problem can be labeled ad being legally a hidden defect.

Any latent defect typically must be confirmed by a qualifying authority on the subject matter. If the defect is serious and was not made clear, communicated or pointed out to a potential buyer and any real estate agents involved can be considered a hidden defect.

What are the criteria that determine a latent defect?

It should be noted that the normal wear and tear of a specific part of a building is not necessarily a factor that constitutes it as being a hidden defect. The deterioration of an aqueduct pipe, for example, would not qualify as an element in a transaction that would fall into the category of latent defects.

Here are the four criteria when evaluating for a defect:

  • Unknown to the buyer: during the sale, the buyer was not made aware of the presence of a defect in the building. Should the seller inform the buyer, then he/she no longer has the right to classify the stated issue as a defect.
  • The occult nature: If after diligently inspecting the property, any potential defect or problem still escapes being spotted, this is considered a case for a latent defect. To be classified as a hidden defect, any signs must be invisible to the buyers naked eye. However, if the buyer does not perform this mandatory inspection, he may not be able to leverage any warranty of quality rights he is entitled to.
  • Anticipation: hidden defects must be prior to the sale. This criterion remains important because without it we cannot hold the seller responsible.
  • A serious element: the seriousness of the problem that arises makes it possible to determine if it is a vice. It is necessary that the problem affects the decision of the buyer and cause him to regret having acquired the property at that price.

What are the solutions for the buyer?

Real estate lawyer for latent defect

According to Article 1739 of the Civil Code of Québec, the buyer has the obligation to communicate the found defect to the seller by way of a written statement.

The first step is that the buyer must warn the seller of the presence of hidden defects. To do this legally, he should seek the help of an expert in real estate law in order to facilitate the process.

Once the two parties are in agreement that changes to the original sale price are required, the buyer has different choices to make.

Canceling the sale entirely or reducing the selling price

In the case of a cancellation of sale of property, the seller will have to refund the selling price and all the costs of the real estate transaction, as soon as the buyer returns the keys.

As for the reduction of the price of a purchased property, the amount demanded is often established according to the cost of the work or repairs to be done.

The new owner can directly request that various repairs to the property be made through the services of an expert in real estate law in order to avoid canceling the sale entirely.

On the other hand, if the repairs are financially cost prohibitive, it is within the right of the buyer to request for the cancellation of the acquired property. Should it be demonstrated that the seller was aware of the defect, the buyer can initiate a procedure whereas they will seek complete refund of the selling price and make claim for damages.

Whether you are facing a residential or commercial latent defect case in Montreal, we invite you to request the legal services of our latent defect law firm. Sabbagh & Associés is composed of professionals in real estate law and has over 30 years of experience in the specific field of law.

Please note: This article is provided as information only. Persons should contact a real estate lawyer at Sabbagh & Associés should they seek actual advice on a legal matter involving real estate law and/or latent defects.