Fundacja Actum

Sold without Legal Warranty of Quality at the Buyer`s Own Risks

Under article 1442 C.C.Q., the buyer of a property may bring a direct action against a previous seller. However, this article assumes that the right to the legal warranty has been transferred from one owner to another, up to the current buyer who wishes to assert hidden defects. In other words, the legal guarantee must have been transferred to each owner through the chain of ownership. In these circumstances, a buyer who acquires real estate at his own risk will be deprived of the right to bring a direct action against previous sellers, provided that the exclusion of guarantees in the deed of sale is clear and unambiguous. You are looking for a property in Montreal with your real estate agent. If you search online, the detailed property sheets are marked „sale without legal warranty of quality, at the risk and peril of the buyer. Since you are not sure about the meaning of these terms and their implications, ask your real estate agent for more information. In inheritance cases where the liquidator or heirs wish to sell the testator`s property, it is customary for the assets to be sold without legal guarantee, since the liquidator and/or heirs have not lived or lived in the property in question and have no knowledge of the condition of the property. The phenomenon of sales without legal warranty has been observed for several years in real estate transactions in Quebec. However, this phenomenon has increased since 2019 during the pandemic.

Buyers may choose to waive the legal warranty to facilitate the acquisition of the coveted property. Sellers, on the other hand, sell their property without legal guarantees, thinking they will let go of their responsibility. But is it really a good idea? However, the parties may agree otherwise. Often, properties are for sale with the mention „without legal warranty”. In such cases, the buyer acquires the property at his own risk and waives in advance his right to take legal action against the seller in case of hidden defects. Often, the sellers of these properties are people with limited knowledge of the house, such as the executors of an estate. In this case, Lebel J.A. was of the opinion that the wording of the exclusion of warranty in the deed of sale, which was binding on the plaintiff, was clear and unambiguous and that a sale at the buyer`s „risk” excludes both the warranty of quality and the guarantee of title, which includes the public law restrictions of article 1725 C.C.Q. Lebel J. therefore declared inadmissible the initial application against the defendants Marshall and Bergeron and ordered the Invoking the guarantee. In Quebec, the basic rule is simple: each property is sold with a guarantee that exists according to the law on the validity of the title and the quality of the immovable. Under this law, a buyer who has taken possession of a property can sue the seller if he discovers defects of which he could not reasonably have been aware at the time of the transaction.

In any case, the seller is legally obliged to explain any known problems of the property with or without legal warranty. In order to make an offer more attractive, a buyer can also waive the legal warranty and inspection before purchase. The buyer then has no recourse against the seller and is then responsible for hidden and obvious defects of the property. Correcting these deficiencies can result in a considerable amount of money, which is never desirable. The legal guarantee of quality exists by the sole operation of the law and any person who sells a building is required to guarantee its guarantee. It guarantees that the property is free from defects. In other words, the quality guarantee protects the buyer against „defects” that have not been revealed by the seller. However, this warranty excludes defects already known to the buyer. 15.

In July 2022, Justice François Lebel of the Court of Québec rendered a decision confirming that in the event of the sale of an immovable, a clear and unambiguous exclusion clause waiving the guarantee at the buyer`s risk will result in a break in the chain of law that prevents the buyer from taking legal action under this guarantee against the seller and previous sellers. Selling without legal warranty is becoming increasingly popular and is a risky and high-risk practice. Before selling, ask your real estate agent for an expert opinion on the subject that will guide you to the most informed decision. Lebel J. noted that there had been a break in the chain of ownership resulting from the sale at the buyer`s own risk and that the plaintiff could not claim that he was still entitled to bring a direct action against sellers other than the defendants Hamel and Drouin. He therefore ruled in favour of the defendants Marshall and Bergeron and declared the action against them inadmissible. This practice is mainly practiced in the case of property that we may have received as inheritance or something else and in which we would not have lived and about which we have very little information. However, this is an upward trend, including for „normal” single-family homes.

Indeed, in the first months of 2021, 32% of sales of „ordinary” single-family homes in Quebec were made without legal guarantees, according to the JLR study. This represents an increase of 6% compared to 2020 and 15% compared to 2014. -Successions: The heirs of a property may not have a good knowledge of its history. In fact, the property may be old and they do not know if there have been any problems with the quality of the building in the past. In order to protect themselves and avoid the risk of possible lawsuits, the heirs then sell without legal warranty. The quality guarantee concerns hidden defects. When we talk about latent defects, we are talking about a „hidden” defect that undermines the quality of the building. This defect is known to the seller and has been omitted from the seller`s declaration (VIS). In addition, the hidden defect existed at the time of purchase, but was unknown to the buyer. Hidden defects are usually not easily detectable and can be, for example, mold in the walls, cracks in the foundation, moisture on the floor, water infiltration, etc. The legal guarantee includes both the guarantee of quality and the guarantee of the right of ownership. Regarding the validity of the title, the Quebec publishing rights system is quite reliable and the notary will carry out the same checks, whether the sale is made with or without legal warranty.

At this level, the risk is therefore rather low. – Senior sellers: Senior sellers often choose to sell their property without legal warranty to avoid liability as retirement approaches. They then move to a smaller house. In the event of construction defects, with or without legal warranty, the seller is obliged to disclose all problems of which he is aware. If he fails to do so, he can be prosecuted. However, since in many cases the seller does not actually live in the apartment, the known defects can be quite limited. The seller has no further obligation. Therefore, if a defect is detected after the purchase, the seller is not liable. Remember that the purchase of a property without legal warranty means that you buy the property in the state in which it is located, without the possibility of recourse against the seller in case of hidden defects. If you still want to complete the transaction, be sure to have the building inspected by a qualified professional and negotiate the price to compensate for your lack of recourse.

In December 2016, defendants Hamel and Drouin sold the property to the plaintiff, but this time „without warranty of legal quality, at the buyer`s own risk, but with a guarantee of ownership.” The guarantee of the right of ownership concerns defects of the right of ownership. This could concern, for example, a default on the mortgage related to the property before the sale. As a general rule, a house is sold without warranty of quality if it is liquidated by the estate or if it has been taken over, in which case the owner cannot guarantee that the house did not live there. In this case, you can use the legal warranty to force the seller to solve the problem at their expense. You can even cancel the purchase if the problem cannot be resolved. „At the buyer`s own risk” are scary words and it`s important to understand what exactly they mean. Here are some key points you need to know about selling without legal warranty.