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Latent Defects: How To Handle Hidden Defects After Buying A House

You bought a house and discovered latent defects?

If you knew the property was defective, you would not have paid the price you paid for it or even bought it in the first place.

Perhaps you are selling a house and want to better understand in what way you can be held responsible for hidden defects?

In this article, we’ve got you covered!

We will look at the concept of latent defects in Quebec and thoroughly explain to you what it is, what it entails, how to manage it and what legal recourse is possible.

Are you ready?

Let’s get started…

Latent defects meaning

So how do we define latent defects?

Latent defects are defects or flaws not visible or apparent at the moment you bought your house but manifested themselves later in time.

A latent defect is a defect rendering your house or property unfit for the use for which it was initially purchased or diminishing its usefulness so much that the buyer would not have bought it or paid the same price.

If you purchased a home and you were unable to visually see any defects at the time of the purchase and eventually you discovered flaws or defects, that existed at the time of your purchase, you are in the presence of a hidden defect issue.

A latent defect may result in a flaw related to your property, it can be related to the electrical system, HVAC, swimming pool, chimney, roof, basement or anything important related to the property you purchased.

What’s important is that the latent defect or flaw must affect the quality of your property in a significant way.

This means that the flaw or defect must be important or have some severity.

If there is something that was not built according to your taste or resulting from poor workmanship, that may not qualify as a defect.

Apparent defect vs latent defect

What is the difference between an apparent defect and a latent defect?

An apparent defect or patent defect is a defect that is visually apparent or detectable upon close and careful visual inspection without the need to hire the services of an expert.

You don’t need to be an expert to detect an apparent defect.

For example, if you are buying a house and you see the foundation is severely cracked, without having an in-depth understanding of construction standards, you can visually detect that something is wrong.

If you see wear and tear or the aging of a property, that is an apparent defect.

If you see mold, mildew or humidity, that’s an apparent defect.

A latent defect on the other hand is a defect that is not visually apparent even with a careful visual inspection by a diligent buyer or even an inspector.

Typically, a latent defect is one that becomes apparent after you have done some excavation or you’ve done some demolition work revealing the defect.

Conditions for a defect to be considered latent defect

For a defect to be considered as a “latent” defect, you will need to be in the presence of several conditions:

  1. The defect or flow must not be visually apparent or noticeable at the moment you purchased your house
  2. As the buyer, you were not aware or told that the house was affected by this defect 
  3. The defect existed at the moment you bought your property 

If these three conditions are met, you may have a claim for latent defect or hidden defect.

Are latent defects covered by warranty?

Let’s look at the concept of hidden defects under Quebec laws a bit further and see how latent defects may be covered by the legal warranty.

Warranty on quality 

Under Quebec laws, the seller of a property is bound to warrant to the buyer that the property, at the time of the sale, is free from latent defects.

In most cases, when you buy your property, you buy it under a legal warranty.

The legal warranty protects you against the discovery of hidden defects after you purchase your property, even if it’s years later.

Knowledge of defects by the seller 

The concept of a hidden defect does not consider the knowledge of the seller in establishing the seller’s responsibility.

The seller of your house can be responsible for the hidden defects of the house whether or not he or she was aware of the defect at the moment of the sale.

When is a seller responsible for latent defects

In what context can a seller of a property be responsible for latent defects?

What has to be disclosed when selling a house in Quebec?

Let’s look at how a seller can be held responsible for latent defects.

Sale of property under legal warranty

The seller of a property can be responsible for latent defects if the property was sold under legal warranty.

It’s important to look at your purchase agreement and see if the contract clearly stipulates that the seller of the house is selling the property under legal warranty.

If the sale was done on an “as-is” or “at your own risk” basis, then the buyer will not benefit from the legal warranty.

Failure to disclose defects at the moment of the sale

If the seller fails to disclose a defect that he or she was aware of, that will definitively allow the buyer from pursuing the seller for damages.

The seller is required to be honest and act in good faith.

If the seller withheld relevant and crucial information from the buyer, depending on how the material is the latent defect, the buyer can argue that he or she would never have bought the property in the first place.

For material latent defects, the seller will be exposed to a much more severe court ruling if crucial information was not disclosed at the moment of the sale.

Misleading the buyer

Similarly, if the seller does not provide an accurate picture of the quality of the property and misleads the buyer, the buyer will have recourse against the seller for damages.

The seller will be responsible for latent defect if there is evidence that misleading information was given resulting in the buyer’s consent to be affected.

The buyer could argue that had the defect been fully disclosed, either he would not have bought the property or would have purchased it at a lower price.

Professional seller

A professional seller will legally be responsible for hidden and latent defects and cannot waive this obligation in a contract.

If you purchased the property from a professional seller who earns a living within the real estate industry, then that seller will be legally bound to provide you with legal warranty.

In addition, you can benefit from a legal presumption facilitating a claim against professional sellers.

If you bought a property from a professional seller and the property malfunctions or deteriorates prematurely in comparison with identical property or property of the same type, the law will presume that a defect existed at the moment of the sale and it’s up to the professional seller to prove otherwise.

The professional seller should either prove that the defect did not exist at the moment of the sale or demonstrate that the defect occurred due to the improper use of the property by the buyer.

When is a buyer responsible for latent defects

The buyer will be responsible for hidden defects in several situations.

Purchase of property on “as-is” basis 

If the buyer bought the property “as-is” or “at your own risk” as outlined in the purchase contract, then the seller cannot be held responsible for latent defects.

When the buyer purchases on an “as-is” basis, he or she is essentially waiving the legal warranty on quality.

When the seller of your house is a professional seller, such as a real estate agent, builder, developer or a professional earning income in the real estate industry, then the seller cannot waive the legal warranty on quality.

The professional seller will therefore remain responsible for hidden defects.

Apparent defects

The seller will not be responsible for a defect if the defect was apparent.

Article 1726 of the Civil Code of Quebec defines an apparent defect as a defect that can be perceived by a prudent and diligent buyer without the need to resort to an expert.

If the defect complained about was visually detectable and visible at the time of the purchase, then the buyer must assume the responsibility for that defect.

Defects disclosed by the seller 

In the event the seller of your house disclosed the defects at the moment of your purchase, then you will have no resource against the seller if the defect resulted in damages to your property at a later point in time.

Typically, sellers provide buyers with a declaration where they disclose all the issues they are aware of affecting the property.

This declaration will be a useful document if in the future an issue of hidden defects arises.

Defects noticed by the buyer

A buyer of a house can also be responsible for a defect if he or she had noticed it at the moment of the purchase.

Imagine for example that the buyer had visited the house with a friend who had brought a defect or a flaw to his or her attention.

If the buyer did not act on that information or do anything about it, then the buyer can be held responsible for the defect.

What to do if a latent defect is discovered 

You bought a house with problems not disclosed and now you discovered a latent defect.

What should you do now?

There are certain crucial steps to take in order to get the full protection of the law when you discover latent defects.

Latent defect demand letter

If you discover that the house you bought is defective, you must give a written notice to the seller within a reasonable time after you discover the latent defect.

If you do not give a notice to the seller within a reasonable time, this failure will be fatal for your latent defect claim against the vendor. 

If you did not notify the seller within a reasonable time, but the seller was aware of the defect or it was impossible for the seller to be unaware of the defect at the moment of the sale, then the late notice cannot be used as an argument by the seller against your hidden defect claim.

Your latent defect demand letter should cover a few points:

  1. Description of the defect
  2. Give notice to the seller that you are invoking your legal warranty
  3. Provide the seller an appraisal or an estimate of how much it can cost to repair the defect if you have this information 
  4. Request that seller inspect the premises and do the repairs at his expense
  5. Tell the seller that if he does not inspect the premises or repair the defect, you’ll do it at the seller’s expense 
  6. Give the seller a timeline to respond to your letter

If you are not sure about how to formulate your demand letter, a hidden defects lawyer in real estate can help you.

Allow the seller to inspect the premises

If you intend to have the seller pay for the expenses and costs related to the repair of the defect, you must make sure you give the seller a chance to inspect the premises before you do any work.

If you do the work yourself or alter the defect, then the seller can argue that he or she did not have a chance to see the defect or be able to take possible remedial actions when it was possible.

Give the seller of your house a chance to visit the premises and assess the damages.

The seller should be given an opportunity to make a decision on whether or not he’ll fix the defect.

If the seller does not do the repair, then you can do the repair and ask the seller for damages.

Take legal action 

Once you’ve given your written notice and given the chance to the vendor of your house to inspect the defect and take remedial action and still no success, your next step is to take legal action.

Just like any other civil action, you have three years to file a claim from the moment you discovered the defect.

What recourse do I have for latent defect

The legal warranty protecting you from buying a property affected by a latent defect can be quite interesting.

You have the right to request damages equivalent to the amount it will cost for you to repair the defect.

You can also ask that the seller handle the work directly and at his expense. 

If people were hurt or hospitalized or if you suffered prejudice directly as a result of the defect, that too can be claimed from the vendor.

If the defect was important but not extremely severe or significant, then you can ask for a reduction in the sales price in addition to damages you may have suffered.

In other words, you will argue that if you had known the property was affected by the defect, you would not have paid the same price to buy it.

Finally, in cases of material latent defect or a defect affecting the property in such an important way that you would have never bought the property had you known, then you can ask for the cancellation of the purchase of the property and a reimbursement of what you had paid.

Sale under judicial authority 

A property purchased via legal action or judicial authority will not provide the buyer with a warranty against latent defects.

The purchase of any property under legal auction will be considered an “as-is” sale.

Responsibility of the real estate broker

If you bought your property with the assistance of a real estate broker, you can expect some degree of responsibility on the broker’s part.

However, the broker cannot be held accountable for the seller’s misleading information or misrepresentation.

The broker has to be diligent in his role but does not have a duty to investigate everything at length.

The broker must have the seller complete a “declaration by the seller of the immovable” form where the seller must declare important things he or she knows about the quality of the property.

The purpose of this form is to inform the buyer of any possible defects that can affect the property.

The real estate broker should recommend that you inspect the property before buying it.

Depending on the condition of the property, the broker may even have a duty to inform you to do more detailed inspection with regards to a particular element of the property.

If the broker has done his or her job by having the seller disclose the defects on the form and guide the buyer to do an inspection, then the broker should have not any accountability with regards to hidden defects you discover after.

Remember, a hidden defect by definition is one where even an expert may not have been able to detect through a visual inspection.

Responsibility of the inspector

The inspector has a duty to inspect the property and inform you of his opinion with respect to the condition of the property based on a visual inspection unless you’ve asked for a detailed inspection of a certain issue.

The inspector is someone who understands the building code and is trained in detecting signs of defect or degradation.

If you hired an inspector to visually inspect the property before you purchased it, that demonstrates that you were diligent as a buyer.

If the inspector had missed important visual elements in the property and did not provide you with a competent report, then the inspector can be held responsible for damages you suffered as a result of the hidden defect.

In most cases however, inspectors do a good job of visually inspecting the property.

In their report, when they see something important to be flagged, they’ll flag it and even recommend that the buyer do additional inspection as needed.

To hold the inspector accountable, you’ll need to demonstrate that the inspector has failed to perform his duties competently and based on the standards expected from such an expert.

For example, you hired an inspector to inspect the chimney to ensure that it’s built according to code and he confirms that the chimney is good.

If later on you discover that the chimney was not built according to code resulting in an important defect revealing itself, the inspector can be held accountable.

In this case, the inspector missed an element that falls under his area of expertise.

Takeaways

Latent defects or hidden defects are unpleasant to deal with.

You bought a property that you fell in love with.

Now, you have to deal with the defect and get into legal issues with the seller. 

This has the potential of causing you headache, stress and anxiety.

You should not worry, you may have a recourse.

In this article, we looked at the recourse for latent defects or hidden defects.

We discussed in detail what is a latent defect, what you should do when you discover it, how you should notify the seller, who can be responsible and so on.

A recourse for hidden defects may be necessary if the defect was so serious that you would not have bought the property if you had known about the defect or at least you would not have paid the same price.

You should read through this article and make sure you understand the different steps you need to take when you discover latent defects.

If you want to make sure you protect your legal warranty recourse and take the right steps, you can always reach out to a competent latent defect lawyer to help you.

We hope this article was useful in helping you navigate your latent defect issue.

We wish you best of luck!

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