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Exposing Hidden Defects

A seller sells and a buyer buys. Is that the end of the story? No. It is still possible that the house, car, or computer that was sold had defects that were not apparent at the time of the sale. These are called hidden defects and the fact that they have materialized can influence the sale or the price, or even engage the liability of the seller.

A seller sells, a buyer pays and presto! A pedestrian becomes a driver or a lessee becomes an owner. Once the sale is completed, can the seller wash his hands of the transaction?

No. It is possible that the house, car, or computer that was sold had defects that were not apparent at the time of the sale. These are hidden defects (also called latent defects) and the fact that they have materialized can affect the sale or the price, or even engage the liability of the seller.

What is a hidden defect?

A hidden defect is first of all a “defect”. This defect must be important enough to suppose that if the buyer had been aware of the item’s real condition, he would have either negotiated a different price for it or chosen not to buy it at all. Normal wear and tear is not a defect.

The defect must also be “hidden” which means that the buyer could not have suspected that there was a defect even after having thoroughly examined what he was buying.

Finally, the hidden defect must have existed before the item was sold.

Some good examples of hidden defects are a cracked septic tank, a clogged drainage system, or a weakness in a beam. On the other hand, a badly glued ceramic tile in the bathroom is not serious enough to be a “defect” and roofing that is visibly damaged cannot be considered “hidden”. Clearly, if the seller points out the defect before the sale, it is not hidden.

What can a buyer do if he discovers a hidden defect after the sale?

First of all, the buyer must notify the seller in writing about the existence of the problem. This must be done quickly because any delay can cause damages that he might not be able to claim later.

Three distinct types of claims are available to the buyer. The buyer can make a claim for the seller to fix the problem at his own expense. The buyer can make a claim for the amount of money that is required to make the necessary repairs or to compensate him for the loss of value resulting from the defect. Finally, in the case of a very serious defect, the buyer can demand that the sale be cancelled.

What if the seller did not know about the hidden defects?

The seller is liable for any hidden defects that existed at the time of the sale whether he knew of their existence or not.

Furthermore, if the seller knew that the defect existed, the buyer can make a claim for compensation for expenses incurred as a result of repairing the defect or of cancelling the transaction (for example, loss of enjoyment, hotel stays). This can dramatically increase the amount that the seller will have to pay at the end.

How can a buyer protect himself?

Remember that to be “hidden”, the defect must be unnoticeable when the good being sold is thoroughly examined. Therefore, the buyer should make sure to carefully examine the good being sold in order to determine its condition.

The best precaution that a buyer can take is to make use of an expert, especially when the good being sold is valuable, used, or when the buyer does not have sufficient knowledge of the good to conduct the examination himself. For example, if a building inspector doesn’t find fault with the house that a buyer is getting ready to purchase, it is hard to see how the seller could claim later that any defect was apparent at the time of the sale.

Are there other recourses available to the buyer of a defective good?

Yes. Sometimes a seller will sell something that doesn’t fully belong to him thereby exposing himself to a possible lawsuit. The contractors, architects, and engineers who participated in the construction of a building are liable for their work for the 5 years that follow. The Consumer Protection Act also establishes responsibilities for sellers and recourses for buyers.

Finally, there are all kinds of warranties that a seller might make, as well as warranties from the APCHQ (Association provinciale des constructeurs d’habitations du Québec), the agents involved in a sale, a car’s manufacturer, a product’s manufacturer, insurers, etc.

To find out more, read the following Infosheets:

Your responsibilities when selling your home  (http://www.educaloi.qc.ca/en/loi/owners/105/)

The Consumer Protection Act  (http://www.educaloi.qc.ca/en/loi/consumers/44/Act)

Buying a used automobile or used motorcycle from a merchant  (http://www.educaloi.qc.ca/en/loi/consumers/30/)