In order to guard against possible recourse for latent defects, a seller can limit his liability by selling a good “without legal warranty, at the buyer’s risk and peril” .
It is important to understand the scope of the exclusion of the legal warranty.
In recent years, the proportion of real estate sales without legal warranty has steadily increased.
This is notably the case with sales of real estate flips.
But, contrary to what sellers sometimes think, the absence of a legal warranty does not fully protect them against legal remedies.
Small reminder on the legal guarantee.
The seller is required to guarantee the right of ownership and the quality of the goods he sells.
Many real estate properties are sold with legal guarantees.
This guarantee specifically protects the buyer against hidden defects that could affect the building and also guarantees him the right of ownership over the purchased building.
As for the hidden defect affecting a building, four general conditions must be met:
- The vice must be serious.
- The vice must be hidden.
- The defect must have existed before the sale of the building.
- The defect must be unknown to the buyer at the time of the sale of the building.
The legal guarantee of quality and ownership may be completely excluded or reduced in the sales contract, which could affect the rights of the buyer, in particular in the event of hidden defects.
Con sequences of the complete exclusion of the legal warranty.
In some transactions real estate is sold without legal warranty ” at the buyer’s risk “.
In principle, this type of clause would exclude both the legal guarantee of quality and the legal guarantee of ownership.
However, such exclusion of warranty does not give the seller carte blanche to override any rule of law.
Indeed, a seller could not be released from his responsibility for the material damage caused to the buyer because of his gross or intentional fault, nor to avoid the consequences of his lies or fraudulent maneuvers towards the buyer.
As a result of the discovery by the buyers of serious problems affecting the property sold and although it is not possible to have recourse against the seller on the basis of the legal warranty.
However, the purchasers could invoke a recourse for defect of consent and because of ” dol Of the seller is invoked.
In this case the buyers will have to show that the seller acted in bad faith towards them and that he intended to deceive them at the time of the sale.
The ” dol ”Of the seller may in fact be a reluctance, a silence, a lie, or of having deliberately placed the buyer in a false sense of security.
Case law.
In several judgments, confirmed by the Court of Appeal, the Superior Court reminds us that, even in a sale where the legal warranty is expressly excluded, the seller must act in good faith, cooperate with the buyer and provide him with all the necessary information so that he can decide, in full knowledge of the facts, whether or not to buy the good.
In a first file, the seller had indicated to the buyer of the building that there was indeed a sump (septic tank) by his various declarations before the sale.
However, the buyer discovered after the purchase (or rather did not discover) that there was no sanitary installation.
In this situation, the court canceled the exclusion of legal warranty clause and determined that the property was affected by a latent defect resulting from the total inexistence of sanitary installation despite what the seller had led the seller to believe. ‘Buyer.
In a second case, the seller had sold his building, at the buyer’s own risk, without however mentioning the building’s fungal contamination problems.
A former tenant who lived in the building had sent the seller an explicit letter, in which a doctor reported serious health problems of the occupants of the building, which were attributable to the fungal exposure of the building.
The Superior Court mentions that “ Failure to provide this essential and decisive information demonstrates [de la part du vendeur] a total disregard of interests [de l’acheteur] and recklessness in the face of the resulting consequences. ”
It is then concluded that the seller was at fault and declares the exclusion of warranty clause inoperative.
The Superior Court therefore pronounces the cancellation of the sale of the immovable, condemns the seller to reimburse the buyer for the work carried out on the immovable, in addition to ordering him to pay punitive damages.
The Court of Appeal, for its part, refused to hear the seller’s appeal, deeming it doomed to failure.
Conclusion.
Exclusion of the legal warranty reduces the buyer’s possibilities of recourse in the event of latent defects, but does not mean that the latter no longer has any recourse against the seller.
The seller must, despite this type of clause, act in accordance with the requirements of the law and not attempt to deceive the buyer.
Sell at the buyer’s risk: yes, but fair!
* The information in this article is general in nature and does not constitute legal advice or advice. Facts can vary from situation to situation and potentially change any legal response.
Consultation with a lawyer regarding your particular case is strongly recommended.
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