Hidden Defects in Buildings

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After looking for a long time, you've finally bought your dream house! A few months later you notice cracks in the foundation. You find out that it will cost several thousand dollars to fix them. No one mentioned the problem when you bought the house. The problem could be what is called a hidden defect.

Whether you buy from a professional seller or anyone else, you usually benefit from the warranty against hidden defects. In other words, the law protects you.

The warranty against hidden defects, also called the "warranty of quality", applies to the building and to everything attached to it, such as

  • a pool,
  • a chimney,
  • a deck,
  • a garage, or
  • a storage shed. 

Be careful, there are exceptions! For example, if you buy something at a judicial sale (following a court decision or court order), you don’t get the warranty against hidden defects.

 

What is a "defect"?

A defect is a flaw that affects the quality of a building. A significant defect that means the owner does not have the full and normal use or enjoyment of her property.

The law protects the buyer if the flaw is so serious that the buyer might not have bought the property or paid as high a price if she had known about it.

 

What is "hidden"?

A defect is "hidden" if meets these three requirements:

  • It is not apparent and cannot be noticed by a simple examination.
  • The buyer does not know about it.
  • It existed at the time of the purchase.

The seller is responsible for a hidden defect even if, at the time of the sale, she did not know it existed.

 

"Apparent" Defects

In general, a seller is not responsible for defects that are apparent.

Apparent defects are visible and can be discovered by a simple examination, that is, without the need for an expert's assistance. This kind of examination can take place when the buyer visits the property. The buyer's examination must be attentive and careful.

As a result, a seller will not be responsible for these defects:

  • apparent defects
  • defects the seller told the buyer about
  • defects the buyer knew about or had noticed at the time of the purchase

 

Remedies for the Buyer

Depending on the situation, the warranty against hidden defects gives the buyer these rights, among others:

  • a reduction in the price paid
  • reimbursement of the cost of repairs done or that must be done to repair the defect
  • in some cases, reimbursement for harm suffered
  • cancellation of the purchase, return of the building to the seller and a reimbursement of the purchase price

What can you do if you discover a hidden defect?

Important! You must notify the seller as soon as possible after the defect is discovered. The notice must be in writing.

 

Buying at Your Own Risk

If you buy a building "at your own risk", this means you accept the condition it is in, whether it has defects of not. If this kind of sentence is in the purchase agreement, you don't have protection against hidden defects! You are buying the building "as-is", including its defects.

Note: If you bought a building from a professional seller, the seller cannot sell it to you at your own risk and without a warranty: the seller must guarantee the quality of the building.

To understand the difference between a professional and non-professional seller, here are examples taken from court decisions:

Non-Professional Seller

Professional Seller (also called a specialized seller)

  • An individual who sells his own house.
  • A retired real estate agent who sells his own house.
  • A lender, such as a bank, that sells a property owned by someone who failed to pay the mortgage (the property was repossessed).
  • A person acting as the liquidator (executor) of an estate.
  • An individual who occasionally sells real estate.
  • An individual who earns his living from selling real estate on a regular basis.
  • A seller who also built the building in order to sell it.

Be careful! When a real estate broker acts as a go-between between a seller and buyer, the broker is not a professional seller.

In all cases, if the seller knew about the hidden defect and didn't tell you, you have reason to complain about this kind of dishonest and fraudulent behaviour and can act to protect yourself.

 

Sellers Must Tell Buyers About Defects They Know About

Sellers must tell buyers about defects they know about. In other words, they must be honest.

Sellers cannot do these things:

  • lie to hide the existence of a defect
  • fail to mention something important to the buyer
  • provide misleading information to get the buyer to pay a higher price

The seller must inform you of any defects so that you can determine the cost of renovations or repairs. Some defects can reduce the value of a building. If the seller informs you of them, you can try to negotiate a lower price.

 

Inspect the Building Before Buying

You are not required to hire an expert to inspect the building before you buy it. However, the law says that any defects you could have noticed  if you were a careful buyer are not covered by warranty.

In other words, if you don't do an inspection, or don't do it carefully,the law says that you accept any defects and the cost of fixing them.

Here is what it means to be a "careful" buyer:

  • Do a visual inspecition of the building.
  • Be attentive to any clues that indicate a defect.
  • Act like a careful buyer in the circumstances. This could mean that, if you suspect a defect, you arrange for a more detailed inspection by an expert.

Some buyers prefer to have an inspection done by a building inspector. These inspectors usually have the ability to do a careful inspection, spot any defects and, if there seems to be something serious, refer the buyer to other kinds of experts.

It is a good idea to check that the building inspector or other expert you use has professional insurance. This insurance can cover damage caused by hidden defects that the inspector or expert should have noticed during an inspection but failed to do so.

Important !
This article explains in a general way the law that applies in Quebec. This article is not a legal opinion or legal advice. To find out the specific rules for your situation, consult a lawyer or notary.