Hidden Defects 101
What Is A Hidden Defect?
Any flaw or defect in an immovable property resulting from inferior design, deterioration, or a construction mistake made prior to sale, whether intentional or not.
- Existed at the time of the transaction
- Is not apparent in plain site and often cannot be noticed by a simple inspection
- Affects the quality and value of a property
- Prevents the occupant from normal use (or enjoyment) of the property
- The buyer does not know about it and could not have reasonably suspected it prior to the transaction
Had the buyer known of the defect, he or she would not have bought the affected property or, if he had, would have paid significantly less.
Examples of Hidden Defect?
- Cracks in the foundation
- Plumbing or drainage problems
- Inadequate wiring, plumbing, heating or cooling
- Mould in the walls or ceilings (or anywhere for that matter)
- Infestation (vermin, pests, etc.)
- Suicide or violent death
Parties to the real estate transaction
Obligations of The Seller
The law binds the seller of a property to:
Complete the mandatory form entitled
Declarations by the Seller of the immovable
Inform buyers about any defects they are aware of to allow buyers to determine:
The actual value of a home
The defects that may reduce its value, allowing them ask for a reduced price
The cost of any necessary repairs or renovations
By law, the seller cannot:
Fail to disclose to the buyer anything that may affect the value of the property
Exaggerate to encourage the buyer to buy on better terms, such as for a higher price
Obligations of the Inspector
Review the seller declaration
Careful visual examination of:
Visible and accessible components
Elements to inspect:
Provides a detailed written report of findings:
Indications of any defects observed, especially those that require:
Urgent or major repair work
More in-depth expert opinion
Structure of the property
Doors and windows
Obligations of the broker:
Recommend to the buyer that he or she have a home inspection done
Identify the client
Identify any other party not represented by a real estate broker
Verify all documents related to the property (Act of Sale, Hypothec (a.k.a. Mortgage), Property Taxes, etc.)
Verify the Certificate of Location
In the event you are purchasing a condominium, obtain and verify the Declaration of Co-Ownership, minutes of condo meetings and any other information related to the financial affairs since at least the past year.
Verify that the Seller’s Declaration has been properly filled out.
Maintain the file for at least 5 years.
Obligations of the Inspector
Inspector is responsible for:
not hidden defects
The Warranty of Quality
Buyers in Quebec are protected by the “warranty of quality”, which applies to the property and everything attached to it, such as:
A pool, chimney, deck, garage, storage shed.
There are exceptions to the Warranty:
- Buying Under Judicial Authority (i.e. bank, municipal authority, or any other such entity that never had possession of property)
- Buying at Your Own Risk (a.k.a “As Is”)
- Buying from an Estate
The warranty against hidden defects may grant buyers one or more of the following rights:
Reduction in the price paid for the purchase of the property
Reimbursement of the cost of repairs done or that must be done to repair the defect
Compensation for harm suffered, and exceptionally
Cancellation of the purchase, reimbursement of the purchase price and damages
You found a Hidden Defect: What to Do!
- Stop renovation work
- Document the defect
- Notify seller
- Give seller opportunity to see/inspect alleged defect
- Wait reasonable delay for seller response/position
- Get quotes/inspection report to qualify defect
- Attempt to reach agreement with seller and put in writing
- Act on quote
- Take legal action against seller for cost of repairs