Latent defects are a recurring problem that attorneys in today’s legal practice have to deal with on a daily basis. As more and more people are entering the realm of real estate and buying and selling immovable property, more problems are bound to occur involving the sale of immovable property.
WHAT IS A LATENT DEFECT?
What are latent defects you ask?
A latent or hidden defect is a fault or a flaw in an immovable property that cannot be seen by the naked eye at the time of the purchase. In order to qualify as a latent defect, it must have existed at the time of the purchase and it must not have been obvious or apparent to notice to the prudent buyer placed in the same circumstances, but serious and important enough to constitute a latent defect. Needless to say, the defect must have existed at the time of purchase or prior to the purchase but can materialize later on so long as the defect is denunciated to the seller within the delays. Finally, it is imperative that the defect in question render the immovable property unfit for its intended purpose in such a way that, had the buyer known of the defect in question, he would have never bought the immovable property or, at the very least would have not paid such a high price for it.
All of these conditions must be reunited in order to characterize the defect in question as a latent defect.
The Civil Code of Quebec offers protection to buyers from latent defects through section 1726 C.c.Q. This section ensures a warranty of quality for the buyer save and except when the property is sold without legal warranty.
Let us breakdown these conditions as follow:
1) DID THE DEFECT EXIST AT THE TIME OF THE PURCHASE?
The latent defect only has to exist at the time of the purchase. It is therefore not necessary that the latent defect have its existence prior to the purchase in order for it to be qualified as latent.
In certain situations, the latent defect only appears and materializes after the purchase of the property. It is important to prove through an expertise that even though it appears after the purchase of the property that the latent defect existed at the time of the purchase of the property.
2) IS THE DEFECT HIDDEN?
Secondly, a latent defect is a defect if 2) it is not apparent (hidden) or obvious to a prudent buyer or to an inspector conducting a routine non-destructive pre-purchase building inspection and did not discover the defect.
The defect in question must be incapable of being seen from the eyes of a reasonable person.
It is not the responsibility of the buyer to open up walls or dig holes in order to discover a latent defect but the hidden aspect of the defect must be analyzed objectively with regards to the degree of the inspection of the property by the buyer following the criteria of a diligent and prudent buyer.
It is important to note that the criteria of a diligent and prudent buyer enquires into whether or not a diligent buyer would have discovered the defect or the potential risk of a defect without the need of expert assistance.
For example, if Mr. X buys a house with a latent defect, the court will not determine whether Mr. X personally saw or knew about the defect before buying the property, but whether or not he should have seen the defect, comparing Mr. X to what we expect the average person to see or know in the same circumstances.
3) DID THE DEFECT RENDER THE IMMOVABLE PROPERTY UNFIT FOR ITS INTENDED USE?
Thirdly, another criterion for a latent defect is 3) whether or not the defect in question renders the immovable property unfit for the use it was purchased for.
The defect must be grave and serious enough that had the buyer known about the defect in question, the buyer would not have bought the property or at least not paid such a high price.
It will be the buyer’s responsibility in a lawsuit to prove that he/she would not have purchased the property in question had he/she known about the defect.
4) DID THE BUYER DENOUNCE THE DEFECT TO THE SELLER?
The buyer is obliged to provide a denunciation to the seller within a period of six(6) months from the knowledge of the latent defect. This notification should be performed in the form of a letter of demand with the purpose of putting the seller in default for the latent defect(s) on the property. The primary goal of sending the letter and putting the seller in default is that it provides the seller the opportunity to access the property, observe the alleged latent defects and provide him/her the ability to either repair the latent defect(s) and/or hire an expert of his/her choosing to repair the defect or deny the alleged latent defects in question before the matter is handled judicially before the courts.
5) IS THE DEFECT IMPORTANT AND SERIOUS?
A defect that has minor repairs or is considered insignificant from a monetary perspective does not constitute a latent defect.
A latent defect must be serious and important enough to impact the quality of the property whereby the buyer would have either not purchased the property or that the buyer would not have paid such a high price.
All the conditions as herein stated above must be present in order for the court to deem the defect as a latent defect.
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The above noted text should not be construed as providing legal advice or a statement of your claim. The process highlighted above are merely parameters and barometers and do not constitute any warranties and guaranties with regards to your file at hand. We strongly recommend that you seek legal advice with a licensed attorney from the Barreau du Quebec or a notary at the Chambre des Notaires. Each case must be seen and analysed on its merits as the legal process may be complex and cumbersome.