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According to Article 1726 of the Civil Code of Quebec, a hidden defect is a flaw that makes a property unfit for the purpose for which it was intended or that reduces its usefulness so much that the buyer would not have purchased it, or would not have paid the same price, had they known about it. For a defect to be considered a hidden defect, four criteria must be met:

The defect must be serious : It must make the property unfit for its intended use or significantly reduce its utility.

The defect must be hidden : It must not be apparent and cannot be discovered by a careful and diligent examination.

The defect must be unknown to the buyer : The buyer must not have been informed of the defect at the time of the sale.

The defect must have existed prior to the sale : The flaw must have been present at the time of the transaction.

Common examples of hidden defects include water infiltration in the basement, foundation problems, hidden mold, or major roof defects.

It is important to note that regular repairs and normal maintenance of a property are not considered hidden defects. For example, replacing a roof after 25 to 30 years or windows after 40 years is generally expected and does not constitute a hidden defect.

In case of discovering a hidden defect, the buyer has a prescription period of three years from the discovery of the defect to take legal action against the seller. It is recommended to consult a legal professional for advice tailored to your specific situation.

Has it ever happened that, the day before signing at the notary to purchase a home, your client calls to report the discovery of a major defect, jeopardizing the completion of the transaction?

What should you do in such a situation?

A clause included in the promise to purchase allows a prospective buyer to postpone or cancel the purchase of a property if a serious issue is discovered.

Clause 6.5 of the Promise to Purchase

This clause, included in the mandatory form used by real estate brokers and agents in Quebec, outlines the conditions related to the discovery of a defect or irregularity.

6.5 Defect or Irregularity

If, before the signing of the deed of sale, a defect or irregularity affecting the title or a non-compliance with a seller’s warranty is reported, the seller has 21 days from receipt of written notice to:

• Remedy the defect or irregularity at their own expense, or
• Inform the buyer in writing of their inability to do so.

In the latter case, the buyer has five (5) days from receipt of the notice to:

1. Accept the property with the alleged defects or irregularities, which will accordingly reduce the seller’s warranty; or
2. Cancel the transaction, thereby rendering the promise to purchase null and void.

f the buyer chooses to cancel the transaction, they may request reimbursement for reasonable expenses incurred in connection with the purchase, such as notary fees, inspection costs, or bank account opening fees.

Examples of Defects or Irregularities

An inground pool encroaching on an easement (e.g., Bell Canada or Hydro-Québec).

A basement dwelling deemed non-compliant by the municipality.

Good to Know

Written Notice Required : The buyer must inform the seller as soon as the issue arises. This must be done before signing the deed of sale with the notary, as after that point, it is too late to invoke this clause.

Strict Deadlines : The five (5) day period granted to the buyer is strict and cannot be extended.

Option for Amicable Settlement

The seller and buyer may agree on an amicable solution, often involving financial compensation. This agreement should be documented in writing with the assistance of a notary or lawyer.

In summary, Clause 6.5 provides the buyer with clear remedies in case a defect or irregularity is discovered before signing the deed of sale, ensuring a fair and transparent transaction.

The presence of iron ochre in the soil, by itself, is generally not considered a hidden defect in Quebec, except in certain specific circumstances. For a defect to be classified as hidden under Article 1726 of the Civil Code of Quebec, it must meet several criteria, including being serious enough to make the property unfit for its intended use or to significantly reduce its utility to the point that the buyer would not have purchased the property or would have offered a lower price if they had been informed.

Here Are Some Key Points to Consider Regarding Iron Ochre in The Soil:

Nature of the Problem Iron ochre is a substance typically associated with groundwater in soils. It may sometimes appear as rust stains or accumulate in drains and sewage systems, but its mere presence in the soil is not necessarily considered a serious defect.

Impact on Property Use If iron ochre causes serious problems—such as damage to the foundation or significant water infiltration that compromises the property’s structural integrity or safety—it could be considered a hidden defect, as it affects the use and value of the property.

Impact on Value or Use If the presence of iron ochre results in significant repair or management costs (for example, repairs to drains or foundations), it could be considered a hidden defect. However, if the iron ochre only causes minor issues and does not compromise the building’s structure, it is less likely to be classified as a hidden defect.

Conclusion :
The presence of iron ochre may be considered a hidden defect only if it causes significant damage that affects the use of the property, such as foundation damage or major water infiltration. For buyers, it is important to have the soil and building structure inspected by an expert to assess the impact of iron ochre before finalizing a transaction.