What legal warranty means in housing
Decisions about whether to buy or sell without it can depend on risk tolerance
“Sold without legal warranty.”
The simple phrase provokes a lot of questions. What is a legal warranty? What happens if you don’t have it? Why would you waive it? And the big one: Is this a red flag signalling it’s a bad idea to offer on this home?
As buyers from out of province during our last house-hunt, this phrase was our first inkling there even was such a thing as a legal warranty on a home. Coming from the red-hot Vancouver market, where buyers at the time were increasingly writing subject-free offers waiving home inspections, it was a foreign concept to us that there could be such a thing as a legal warranty.
Coming from B.C., we assumed warranties only applied to new homes. Sellers are expected to disclose any known issues, but if there is a defect unknown to the seller that also doesn’t show up in the home inspection report, it’s the buyers who foot the repair bill.
Not so here in Quebec. Montreal lawyer Sylvan Schneider said buyers in Quebec have three years from the discovery of a latent defect to claim the legal warranty — not just three years from the date of purchase. In one case he knew of, the person claiming the defect went back 28 years to sue the person who owned the home after learning of a latent defect in an underground storage tank.
“A lot of people sue and they go back down the chain. Sometimes it goes back four or five owners, with three, four or five lawyers involved. You can even go back to the builder,” Schneider said.
Sometimes a home is sold without legal warranty because it needs substantial repairs, but Schneider said it doesn’t necessarily mean the house is a lemon. In the case of estate sales, for example, the heirs to a property may be unable to provide a full seller’s declaration because they have never lived in the property.
But for buyers, the legal warranty isn’t necessarily a golden ticket to a settlement if something does go wrong with a home. Initiating a claim can be costly, so it often isn’t worth it except in the case when substantial repairs are needed, he said.
In the end, I suppose decisions about whether to buy or sell without legal warranty comes down to risk tolerance. Some sellers don’t want to risk being sued by buyers years down the line over defects they didn’t know about when they owned the home. Buyers on the other hand, might not want to risk waiving the right to sue if a major problem was revealed following a sale.
— West Island Living is a weekly column by St-Lazare resident Briana Tomkinson. To share your thoughts on local real estate, email westislandliving@gmail.com.