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Hidden Defects: Who is Responsible?

You’ve bought a home and uncovered a hidden defect. Oh no! But just who is responsible? Excellent question! When it comes to hidden defects, the question of liability can be a tough one. If you’ve discovered cracks in the foundation, mould, an infestation, or even heating, cooling or plumbing problems, who’s responsible? The vendor? The building inspector hired to inspect the property? Or the broker who negotiated the sale? No need to worry – explanations within!

The real estate broker?

Real estate brokers In Quebec must comply with the legal obligations defined by the Real Estate Brokerage Act (REBA), including the obligation to demonstrate the accuracy of the information provided. As a result, in most cases, the real estate broker cannot be held liable for latent defects in a property which he or she has brokered.

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The building inspector?

Building inspectors must also comply with specific legal obligations. The building inspector’s responsibility is to visually inspect the property for visible defects. Although inspectors must detect visual signs that may indicate the presence of flaws or defects, they are not responsible for uncovering hidden defects that are not detectable to the naked eye. If the building inspector notices an indication of a potential latent defect, he or she needs to mention in the inspection report that further investigation is required by another professional, such as an electrician or plumber.

It’s important to note that if the building inspector reports signs of what might be a hidden defect, that defect would no longer be considered to be hidden, as the buyer was made aware of its possible existence prior to purchase. Therefore, unless the building inspector has been negligent in some way, in most cases, he or she cannot be held responsible for the presence of hidden defects uncovered in the property.

The vendor?

The Civil Code of Québec stipulates that, in the case of a real estate transaction, “The seller is required to guarantee to the buyer that the property and its accessories are, at the time of sale, free from hidden defects[…]” As a result, in most cases the seller is legally liable. If the matter cannot be settled amicably, that person becomes the defendant in a lawsuit.
The law also states that the seller cannot refrain from revealing to the buyer a hidden defect, meaning any flaw or defect that could affect the value of the property. This requirement also extends to exaggerating the qualities of the property. If the seller knowingly conceals or otherwise manipulates the facts, he may not only have to compensate the buyer for the loss in value of the property, but may also be ordered to pay damages as well. The seller is therefore the one who bears the greatest responsibility for hidden defects.

The buyer?

What are the buyer’s responsibilities? The buyer also has his share of obligations. If a dispute arises concerning latent defects and must be settled in court, the judge will want to verify that the buyer has acted prudently and made reasonable choices. The buyer’s behaviour will be compared to that of a “conscientious and prudent person”, both before and after the transaction, as well as in interactions with the professionals mentioned above. Thus, the buyer is responsible for his choices and observations of the property.

In terms of proof of liability, the buyer must prove that the cause of the newly discovered defect predates the sale. The buyer is also responsible for “denouncing to the seller [the defect] within a reasonable period of time since its discovery” (article 1739 of the Civil Code of Quebec). Whether you are buyer or seller, the coverage offered by your Sutton Secur certificate can be used to defend your rights and protect your interests if a hidden defect is discovered. Upon receipt of a request for legal assistance, a Sutton Secur attorney will assess the situation, advise you of your rights and recourses, and assist you in either making a claim or defending yourself from a claim, if need be.

What About an Estate Sale or Foreclosure?

In Quebec, foreclosures and estate sales are not covered by the Warranty of Quality. However, difficulties or disputes may still arise related to these transaction. A Sutton Secur certificate still provides protection for these types of transactions, offering up to $3,000 in lawyer fees to help you with conflicts that may arise, such as neighbour, landlord, and tenant conflicts, title issues or issues related to servitude.

What About a Sale Without Legal Warranty?

It is possible for the seller to attempt to indemnify himself against hidden defects unknown at the time of sale. More and more common today are properties sold or bought without legal warranty. To achieve this, a clause may be included in the contract of sale excluding or reducing the Warranty of Quality. However, selling a property without a legal warranty does not relieve the seller of his duty to disclose any known or suspected defects before the sale is concluded. In the event that a seller does not disclose to the buyer an existing defect he is aware of, either by mistake, omission or choice, the Warranty of Quality has the force of law and the seller can be held responsible for the hidden defect or defects in question.

Except in exceptional cases, to cover your bases, we always recommend that the buyer take full advantage of the Warranty of Quality when purchasing a property. When you buy a home, the Warranty of Quality protects you, and your Sutton Secur certificate too!