It’s important you explore every available avenue when it comes to buying or selling a property. One option is selling without a legal warranty. Read on to find out what a legal warranty is, the risks if it’s excluded from a transaction, and the possible remedies for hidden defects.
What is a legal warranty?
The Civil Code of Québec provides that the sale of property made with a legal warranty protects the buyer from hidden defects, except those the seller has reported. Nevertheless, some properties may be sold without a legal warranty. In this case, the promise to purchase and the deed of sale will include the following: “This sale is made without legal warranty, at the buyer’s own risk.”[1]
The legal warranty has two components that exist by the sole operation of law.
The seller guarantees that the property is free from all defects at the time of sale, with the exception of what is reported in the Declarations by the seller form and those discovered during the pre-purchase inspection.
2. Warranty of ownership
This component relates to defects in titles that could deprive the buyer of their right of ownership, ensuring that:[2]
- the property is free of all rights except those declared by the seller
- the seller has discharged the property of all hypothecs, except for those assumed by the buyer
- the property is not subject to any encroachment on the part of the seller or a third person
- the property does not violate any restrictions of public law, except those declared by the seller or those that the buyer should have discovered
Can you sell a house without a legal warranty?
The legal guarantee may be excluded in whole or in part from a real estate transaction. This is sometimes the case for an estate sale, property owned by an elderly person wanting to protect their assets, and property subject to a foreclosure or that will be demolished.[3]
Partial exclusions may apply to construction components, mechanical devices or appliances.
Buying a home without a legal warranty means that you acquire it in the condition it’s in, waiving any recourse against the seller. If you’re dissatisfied, you’ll have to show that the seller deliberately concealed something important enough to prevent the sale or lower the price.[4]
What are the possible remedies if there’s a hidden defect?
The legal warranty allows for recourse against a seller within three years of discovering a hidden defect. The buyer must then send a formal notice to the former owner informing them of the situation and requesting compensation within three to six months.[5]
The buyer can then:[6]
- obtain a partial refund of the sale price
- be reimbursed for the renovations required to repair the defect
- cancel the transaction
- claim damages
Every transaction involves some risk, so surround yourself with experienced real estate professionals for a safe transaction.
