Legal warranty

Even after the transfer of ownership, the buyer benefits from several guarantees. Unless otherwise stated, the sale of a building is subject to a basic guarantee, generally called the "legal guarantee". This guarantee exists by the sole effect of the law, that is to say without it being necessary to provide for it in the contract. Under article 1716 of the Civil Code of Quebec (C.c.Q.), the legal guarantee has two components, namely the guarantee of the right of ownership  (1723 C.c.Q.) and the guarantee of quality (1726 C.c.Q.) against  hidden defects. This guarantee covers the validity of the right of ownership and guarantees the buyer that the building and its accessories are free from hidden defects likely to make them unfit for use or which reduce its usefulness so much that the buyer would not have bought or would not have paid the same price if they had known them.

Warranty of ownership

By guaranteeing the right of ownership, the seller assures his buyer that the building is free of defects in title and that it is vacant:

  • All rights, except those he declared during the sale;
  • Mortgages, unless the buyer has decided to assume the debt thus secured;
  • Any encroachment exercised by the seller on the neighbouring property (e.g. the common areas), or by a third party (e.g. the neighbour) on the property that is the subject of the sale. Unless the seller has declared it during the sale;

Thus, when the immovable is affected by certain charges, the seller has the obligation to disclose them to the buyer and undertake to write them off or correct them unless the lbuyer accepts. In addition, under article 1725 of the Civil Code of Quebec, the seller guarantees any violation of the limitations of public law that apply to the property, and that escape the common law of ownership. These public law limitations relate primarily to municipal by-laws (e.g., zoning and building) and provincial by-laws (e.g., environment and safety). However, the seller is not bound by this warranty when he has denounced these limitations to the buyer during the sale. Similarly, he is not obliged to do so if a prudent and diligent buyer had been able to discover them by the nature, situation and use of the premises, or when these limitations have been registered with the Land Registry Office.

Warranty of quality commonly known as "guarantee against hidden defects".

The buyer expects that his building is of quality and that the use for which he intends it is compliant. The seller is thus liable regarding the warranty of quality, i.e. the guarantee against hidden defects. 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."

However, the seller does not guarantee the defect known to the buyer or the defect that a prudent and diligent (due care) buyer could have noticed. It is therefore important for a buyer to always have a competent expert inspect the private portion he proposes to acquire, as well as the common elements of which he will come to co-own undivided. In addition, the professional seller can’t exclude or limit his civil liability by a waiver clause regarding the legal guarantee of quality. It is presumed to have known the defect at the time of the sale, when the malfunction of the good or its deterioration occurs, prematurely, in relation to identical goods or of the same kind. 

Sale without legal warranty

The legal warranty can be increased, decreased, limited in time or even excluded according to the will of the parties to the transaction. When the seller wishes to limit his civil liability in this matter, he will have a clause included in the offer to purchase by which it is mentioned the following: "This sale is made without a legal guarantee of quality, at the risk and peril of the buyer. By providing for the exclusion of the legal guarantee on a fee-for-service basis, the buyer thus becomes solely responsible for the purchased good and is therefore deprived of any recourse against his seller concerning defects discovered after the sale.

However, the seller can never exclude his responsibility for his personal facts. Thus, the seller in bad faith, will not be able to exclude the guarantee for the defects that he knew at the time of the negotiations relating to the purchase as well as at the signing of the deed of sale. In addition, the professional seller can’t exclude or limit his civil liability by a waiver clause regarding the legal guarantee of quality. It is presumed to have known the defect at the time of the sale, when the malfunction of the good or its deterioration occurs, prematurely, in relation to identical goods or of the same kind.

 

WHAT YOU SHOULD KNOW! It is never recommended to exclude the guarantee against hidden defects. However, in the case of an estate, it is common for the liquidator to require that the sale be made excluding the guarantee of quality. In addition, if you buy a building as part of a sale under judicial control, that is to say following a judgment, you will not be entitled to the quality guarantee  against hidden defects.

http://www.condolegal.com/images/Boutons_encadres/A_retenir.pngWHAT TO KEEP IN MIND: It is possible that a vendor may accept to sell its apartment for a reduced price if the sale is made without the legal guarantee of quality. The deed of sale, in those cases, must provide a specific clause addressing this special situation.

WARNING! Be careful in the case of a sale without the legal warranty, because this purchase will be at your risks. In other words, save in exceptional cases, you will not be able to exercise your rights and recourse against the vendor if there is a problem.

 

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