Shedding light on hidden defects
In real estate field, a defect is considered hidden if it has all the following features:
- It existed when the immovable was purchased;
- It is unknown to the buyer;
- It is not apparent;
- It is so serious that, if the buyer was aware of it, he would probably not have bought the immovable or would have asked for a price reduction.
Here is a concrete example: as a buyer, you visit a house where the walls of the basement are covered with Styrofoam for insulation. As everything seems in perfect condition, you proceed with the purchase. However, the following spring, water seeps into the basement of your new home… When removing the Styrofoam, you discover a significant crack dating back several years ago! The seller had declared that he had never had water infiltration before. Since there was no indication suggesting that this problem existed at the time of purchase, you find yourself facing a hidden defect. What can your broker do in this situation?
The broker’s obligations and his limits
From the signing of the brokerage contract to the signing of the deed of sale, the broker has a duty to advise and inform you, but also to detect factors that may adversely affect the parties or the object of the transaction.
How to do this? The broker must, among other things, complete with the seller the Declarations by the seller of the immovable form: the use of this form may decrease the risk of prosecution for the seller and allows the buyer to be fully aware of all the facts during the transaction. The broker must also recommend to the buyer to have a professional or a building inspector carry out a full pre-purchase inspection of the immovable: he can in fact provide you with a list of contacts and even recommend, in some cases, a further inspection.
However, the broker’s “after-sales service” has its limits… Although he can be called to see the damage and problems with you, his role at this stage is however limited. Indeed, the broker is not authorized to:
- Give you a legal opinion ( for example, give you his opinion on the deadlines to take action);
- Draft a formal demand;
- Be a substitute for a building professional to suggest remedial work to the property.
He may however indicate competent professionals who will help you: legal expert, architect, building engineer, etc. Consulting the building inspector who inspected your property before the purchase can also be useful.
In principle, if it goes beyond his role, the broker cannot call upon the Fonds d’assurance responsabilité professionnelle du courtage immobilier du Québec (FARCIQ), which provides liability insurance for brokers and agencies for the activities governed by the Real Estate Brokerage Act. You cannot benefit from all the protection mechanisms provided for in the Real estate Brokerage Act in this situation either.
If you believe you are facing a hidden defect issue, check the “Hidden Defects in Buildings” section on the Éducaloi website for more information and details about the steps to follow to protect yourself (disclosure of defect, deadlines to take action, etc.).
For more details on brokers’ obligations regarding a hidden defect, please contact the OACIQ Info Center.
Also read, the article titled The legal warranty of ownership and quality