The infamous problem of a latent defect appears when you buy a fancy piece of immovable property which later on reveals foundation cracks, mould, roof leaks and other unpleasant surprises. What is particularly unpleasant is the cost of repairs. Sometimes it is comparable with the cost of initial purchase itself.
So you want to sue the seller for your loss. But can you? Were you diligent enough when you were buying? What if all this is your own fault? The Courts in Quebec are dealing with those questions regularly. See, for example, Thivierge c Bouchard and Sylvain c Joubert.
When a defect is “latent”?
A buyer is obliged to be prudent and diligent when inspecting the property he (or she) is going to purchase. The better personal knowledge and experience in construction and evaluation of such a property the buyer has. The higher the level of what is “prudent and diligent” will be. If the Court finds that the defect was apparent, yet the buyer was imprudent and incompetent, the legal protection for warranty of quality won’t be granted. Particularly, it’s important that a buyer seriously pay close attention to any indication of a problem. Hiring an expert is not a requirement if there is no visible indication of a potential problem. Simple possibility to discover a defect during an attentive examination makes such a defect “not latent.” Of course, there is a possibility that the defect was evident, but the hired inspector or even an expert (as inspector is not the same as an expert) simply miss it. This might trigger the inspector’s or the expert’s professional responsibility.
Also, if the buyer discovers a defect but omits to disclose it to the seller, the buyer becomes responsible. However, if the seller knows about the defect but hides important facts from the buyer, such a seller cannot later claim that the buyer was negligent about an apparent defect and failed to proceed with detailed inspection.
Of course, all the above-mentioned implies that the defect was unknown to the buyer. If the buyer was duly informed before purchase, there is no room for a latent defect claim. Yet, there is no presumption of such a knowledge. On the contrary, the buyer is presumed to be acting in good faith. It is on the seller to prove that the buyer knew about the defect in advance.
When a defect is “grave”?
Insignificant defects do not fall under legal warranty of quality. A defect is grave if a diligent and reasonable buyer would not buy. Or would buy at a lower price had he known about the defect. It is not enough to simply say. “I would not buy”, it is necessary to prove that, objectively speaking, an average reasonable buyer would not. One has to show that the defective property is either not suitable to be used for its intended purpose or its usefulness is significantly lower than expected at the price paid.
Usually the Court would look at the costs of repairs, time spent, level of inconvenience caused and appraised drop in value of the property.
Defect should exist before the sale date.
This is different from being obvious before the sale. The defect should be there by the time of purchase, even though in its latent form. It may manifest itself after the sale. The seller will not be responsible for a defect caused by negligent, abusive or otherwise improper use of the property by the buyer.
Sufficient Notice.
Once the buyer detected the problem, he has to inform the seller in writing within a “reasonable period of time.” This time is calculated from the moment when the buyer suspected that there is a defect. (discovered or should have discovered it). However, if it is proven that the seller knew of the defect already, such a seller cannot invoke late notice as a defence.
This “should have discovered” notion is in line with the requirement that the buyer should be diligent and attentive. — Not only before purchase, but also after it. A timely notice would allow the seller to make proper steps, like negotiation, offering help or compensation, or obtaining an independent expert opinion and evaluation. In any case, the buyer should not proceed with repairs without notifying formally (mettre en demeure) the seller. Exceptionally, in a view of some obvious urgency and the seller’s resistance to acknowledge the problem, the buyer may initiate reparation work.
All in all, it’s for the Court to decide in each case, what was the “reasonable period of time.”
