How to recognize a hidden defect?

The real estate market has rarely been so hot. Faced with competition and multiple offers, many buyers are voluntarily foregoing the pre-purchase inspection, a very important step in any real estate transaction.

Failure to carry out an inspection prior to acquiring a property can have serious consequences, including the discovery of potential hidden defects. Some of them could even greatly reduce the value of the home, to the detriment of the new buyer.

But what is a hidden defect? How can we recognize them? And what are their characteristics? Read on to find out.

What is a hidden defect?

Before taking action against the seller, you should first determine whether the defect you have discovered as the new owner is a hidden defect in the eyes of the law.

Article 1726 of the Civil Code of Quebec states that the seller must guarantee to the buyer that the property which is the object of the transaction is free from ‘hidden defects which render it unfit for the use for which it was intended or which diminish its usefulness to such an extent that the buyer would not have bought it or would not have given such a high price for it, had the buyer been aware of them.’ However, the seller is not obliged to guarantee defects known to the buyer or apparent defects, i.e. those that can be detected by a prudent buyer.

The 4 characteristics of a hidden defect

To be considered a hidden defect from a legal point of view, the problem identified must meet several conditions: it must be serious, hidden, present at the time of the sale and unknown to the buyer.

The defect is serious

The problem discovered will be considered serious if it renders your residence unfit for the purpose for which it is intended or if it significantly reduces its usefulness. It must be major, so much so that your legitimate expectations as a buyer are not met and you might not have gone through with the transaction if you had known.

This does not mean that the house must be uninhabitable for the defect to be considered a hidden defect!

The defect is hidden

A hidden defect must be recognized as being hidden, i.e. the problem discovered after the purchase could not have been noticed by a prudent and diligent buyer.

An individual is deemed to have done so if they have carried out a complete and thorough visual examination of the property prior to purchase for the purpose of detecting any signs of a defect. In other words, the pre-purchase inspection, carried out by a competent building inspector, must have found no indication of the presence of this problem.

If signs of potential defects are visible, or are discovered by the building inspector before the transaction, the buyer has a duty to question the seller about these defects and, if necessary, to have them meticulously examined by a professional. In the event that the seller voluntarily discloses false information to the buyer, the problem will be considered a legally hidden defect.

The law does not require you to summon the services of a building inspector before concluding a real estate transaction. However, pre-purchase inspections remain highly recommended, especially if you do not have the skills to interpret the warning signs of defects.

By refusing to perform an inspection of the property before buying it, a court may doubt your prudence in the event of an appeal against a hidden defect. This could lead to a judgment that would be unfavourable to you.

Find out why you should always demand a pre-purchase inspection before acquiring a new property.

The defect is present at the time of sale

In order to have recourse against the seller for a hidden defect, you will have to demonstrate that the defect discovered was already present at the time of the sale. It doesn't matter if it was unknown to the seller or invisible at that time, it is sufficient that the defect was present at the time of the transaction.

This aspect is not always easy to prove. You will be required to call upon the services of an expert to support your point of view and demonstrate that the defect was present at the time of the property transaction.

The defect is unknown to the buyer at the time of the transaction

Obviously, a defect cannot be hidden if it is known to the buyer at the time of sale. Thus, if the seller or inspector mentioned the existence of the defect before the transaction, the problem cannot be considered a hidden defect. The building inspector's report as well as the seller's statement will be very helpful in demonstrating whether or not the defect was revealed prior to the transaction.

In the Seller's Statement on the Property, the seller has an obligation to disclose everything that they know about the property, which includes defects and potentially harmful problems. The advantages of putting this declaration in writing involve the fact that neither the seller nor the buyer will be able to deny the information contained therein concerning any defects in the residence.

The inspection report also makes it possible to keep written evidence of the observations made by the expert. It also allows the establishment of the general condition of the property and indicates, if necessary, the potential presence of defects or signs that would merit further investigation. Once they are indicated in the inspector's report, the defects can no longer be considered as hidden defects, since they have been made apparent.

Exceptions concerning hidden defects

Does the problem you have identified on your property match the above-mentioned criteria? This does not automatically mean that it is a hidden defect. Some situations are exceptions to the rule and may even cause you to have no legal recourse against the seller. Here is an overview of these different situations.

The defect corresponds to normal wear and tear

A discovered defect, even if it is significant, is not necessarily a hidden defect if it is the result of normal wear and tear. And since any material is affected by the passage of time, the components of a property have a limited lifespan, the length of which depends on the individual case.

A problem resulting from normal deterioration, due to age or use, cannot be considered a hidden defect. Instead, a prudent and diligent purchaser is expected to inquire about the lifespan of the various parts of the residence they wish to acquire, particularly if the various documents available to them reveal that no recent replacements have been made for such components.

Again, calling upon a qualified building inspector before buying the property will prove very helpful. In particular, they can advise you on the condition of the materials and the potential of any work required in the event of wear and tear.

The sale was made without legal guarantee

The legal quality guarantee protects the buyer in case of discovery of hidden defects. In some situations, however, the sale of a property may take place without a legal guarantee, which almost completely nullifies the buyer's recourse against the seller.

A transaction without a legal guarantee, at the buyer's own risk, means that you must acquire the desired home in the state in which it is, whether or not there is a defect. In most cases, the selling price will be reduced to offset the risks involved.

Those who decide to sell a property without a legal guarantee are usually individuals or institutions who do not know the specificities of the building, such as an heir after an estate or a bank during a takeover. They therefore protect themselves against possible recourse by removing the legal quality guarantee.

Be aware, however, that selling real estate without a legal guarantee does not mean that the seller may act dishonestly. If the seller intentionally denies the existence of a defect and does not declare it in the Seller's Statement on the Property, they may be prosecuted for providing misleading information.

Some examples of hidden defects

Although a hidden defect can take many forms, here are some common examples of problems that can turn out to be hidden defects.

Mould

Mould can take different forms and hide in several unsuspected nooks and crannies of a house. High humidity, which can be caused by the weather in Quebec, among other things, can lead to this problem. Since it is not always visible to the naked eye, it can be difficult to spot without the help of a professional before the problem becomes serious. This makes it one of the most common hidden defects.

Fungi

An advanced stage of mould, fungi are found mainly on plaster, wood or other organic building materials. Some can be particularly harmful to the health of a home’s inhabitants and can have serious consequences for the structure of the dwelling. It is important to detect its presence quickly to prevent the problem from getting out of control.

Water seepage

Water seepage can happen to anyone, but when it is not well regulated, it can cause significant damage to a property by, for example, creating an environment conducive to the proliferation of mould or by weakening the structure of the building. It can then be considered a hidden defect.

Cracks

Cracks can also be considered hidden defects when they are not apparent. Whether inside (doors, windows, walls, etc.) or outside (foundations), cracks can be the result of a construction defect, freezing and thawing cycles, ground collapse or simple wear and tear of the house. Some cracks can become significantly worse over time until they affect the structural integrity of the building.

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