Latent defect: What appeals for the co-owner

Article 1726 paragraph 1 of the Civil Code of Quebec, provides that " 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 the 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. In other words, the latent defect prevents the buyer from enjoying, as he was entitled to expect, the property sold and its accessories.  However, the purchase cannot be done blindly, as the buyer must exercise caution and diligence in the purchase process.  

Thus, a defect that was denounced by the seller at the time of the sale is not covered by the legal guarantee of quality (latent defects) since the buyer then acquired the property knowingly. A buyer must therefore be particularly attentive to the representations and declarations of a seller, as well as to the documentation given by the latter before the sale

Essential conditions for the implementation of the legal guarantee

The defect must be hidden, sufficiently serious, existing at the time of sale and unknown to the buyer.  A latent defect must thus correspond to a defect of a certain importance, in the building or in its accessories. Here are a few examples:

  • A non-apparent crack in the floor;
  • Water infiltration through the roof, windows or basement;
  • An inefficient insulation system (e.g.: the walls are cold to the touch);
  • Deficient electrical systems or piping.

This excludes anything that is outdated or that results from normal wear and tear.  In addition, a latent defect should not be confused with a defect in workmanship, which is a defect of the building related to non-compliance with the rules of the art. However, even if the building does not meet all the standards, this does not necessarily mean that it is affected by a latent defect.

In fact, to become a latent defect covered by the legal guarantee (guarantee of quality) of article 1726 of  the Civil Code of Quebec, the latent defect must render the immovable, in whole or in part, unusable and greatly affect the usefulness that could be made of the immovable, in whole or in part, to such an extent that the buyer would not have paid as much if he had known the latent defect.

In addition, it should be noted that article 1729 of the Civil Code of Quebec provides that when the defect of a property sold by a professional seller manifests itself prematurely, in relation to goods of the same kind, the defect is presumed to have existed at the time of sale by the professional seller in question. This presumption may, however, be rebutted if the defect is due to misuse of the property by the buyer.

Buyer's conduct

However, the legal warranty does not cover the defect known to the buyer or the defect that he should have known. Apparent is the defect that can be found by a prudent and diligent buyer without the help of an expert, such as apparent cracks in a floor.  In the purchase process the buyer must have exercised prudence and diligence. To assess these last two elements, it is necessary to examine the conduct of the buyer. In a decision rendered by the Court of Appeal, the  latter's obligations were recalled:

  • The prudent and diligent buyer must conduct a careful and complete visual examination of the immovable and must remain on the lookout for any indication that may suggest a defect;
  • If the buyer suspects a problem, he must take reasonable steps to know the actual condition of the building, including the use of the services of an expert;
  • He must check or have verified what is suspicious, otherwise the defect may be qualified as apparent, depending on the circumstances of the case;
  • The buyer will have to be more vigilant according to the vocation of the building; a commercial or industrial immovable must lead it to a more careful examination than a residential immovable;
  • The prudent and wise buyer must examine an old building very carefully; failure to examine the effects of age on components may be reckless.

Building Inspector

When a building shows signs of potential defects, the buyer will have the obligation to hire a building inspector, failing which he may be opposed the apparent nature of the defect. If the buyer is informed of existing problems in the common portions, such as the advanced degradation of a garage slab or water infiltration problems, he must have an appropriate examination of the building carried out, which may mean obtaining specialized help when the buyer has no relevant expertise.

Seller’s conduct

The relationship between a seller and a buyer of a real estate property does not amount to a game of hide and seek. Seller remains subject to obligations of honesty and loyalty to the potential buyer. The seller cannot rely solely on the fact of having denounced the defect to the buyer so that the hidden defect is apparent, it is also necessary that his representations are not fraudulent or falsely reassuring inducing in the buyer a feeling of false security. In a decision of the Court of Appeal, it was decided that fraud  may contribute to the concealment of a defect which, in other circumstances, might be apparent.

Denunciation

The buyer must denounce to the seller, in writing and within a reasonable delay after its discovery, the existence of the defect and the nature of its claims, failing which its right could be extinguished, except in cases where it is established that the seller knew or could not have been unaware of the existence of this situation.  This is particularly true for the professional seller. A formal notice specifying the corrective measures to be taken must also be sent to the persons concerned, as well as a denunciation, which may be sent at the same time.

Judicial recourse

The guarantee against latent defects allows the buyer to obtain, depending on the situation:

  • A reduction in the purchase price of the building;
  • Reimbursement of the cost of rehabilitation work that has been done or will be necessary to repair the defect;
  • The reimbursement of the sums he had to pay as a result of an additional call for charges, called "special assessment", when the rehabilitation work is initiated by the syndicate of co-owners;
  • Reimbursement for damage suffered in certain circumstances;
  • The resolution of the sale to hand over the building to the seller and be reimbursed the price he paid to buy it.

The right to recourse for latent defects depends on proof of a lack of use sufficiently large to render the good unfit for the use for which it is intended or to reduce its usefulness to the point where the buyer would not have bought it at such a high price if he had experienced the defect. Moreover, this judicial recourse for latent defect is not eternal. From the moment of discovery of the defect, the buyer has 3 years (prescriptive period) to assert his right against the seller. Failing to act within that period, such an action is no longer admissible.

As for the damages that can be claimed, these are the costs of corrective work. However, if it is established that the seller knew or could not have been unaware of the latent defect, the buyer could also claim, in addition to the restitution or reduction of the sale price, damages for disturbances and inconveniences due to this latent defect.

 

WHAT YOU SHOULD KNOW!​ A latent defect can affect not only the private portion, but also the common portions. The collapse of the concrete slab of the building will be a latent defect, even if this slab is a common portion.  In certain circumstances, the buyer may be entitled to claim compensation from his seller for the share he is required to pay in the syndicate's future special assesment for the repair of the common portions.

https://www.condolegal.com/images/Boutons_encadres/A_retenir.pngWHAT TO KEEP IN MIND: The law protects the buyer if the defect is so serious that if the buyer had been made aware of the defect, he might not have bought the property or he would have paid a lower price.  However, the quality guarantee against latent defects is not a measure protecting a reckless buyer. The latter must inspect the property he wants and it is recommended that he use a building inspector who will carry out a pre-purchase inspection.

WARNING! ​ The syndicate of co-owners' right of recourse against the contractor, due to a latent defect, a design defect or a construction defect affecting the common portions, does not hinder or reduce the rights of the buyer vis-à-vis his seller. The latter remains responsible for guaranteeing the quality of the property sold, in particular regarding hidden defects that may affect it.

 

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