Sales without legal warranty: good or bad idea?

You think you’ve found that rare gem but it’s for sale without a legal warranty. What does this mean? Do you still have recourse against the seller in the event of a hidden defect? Here's what you need to know.

The legal warranty of quality: what is it for?

The legal warranty of quality informs the buyer that, at the time of the sale, the property is free from defects that would make it unfit for use or that would cause the buyer to withdraw their offer or not pay so high a price if he had been aware of them.

It is strongly recommended that a thorough pre-purchase inspection be conducted by an expert in order to detect any problems.

If you have any questions, your real estate broker will inform you and advise you on the steps to follow for the inspection.

Are defects automatically covered by the legal warranty of quality?

No. To be covered by the legal warranty of quality, the hidden defect must meet the following conditions:

• Must exist at the time of sale
• Must be unknown to the buyer
• Must be serious and prevent use

Sale without legal warranty: what does this mean?

Properties are sometimes offered for sale with the indication “without legal warranty”. In this case, the buyer acquires the property at his own risk and peril, and has no recourse against the seller in the event of latent defects.

Frequently, the sellers in such transactions have limited knowledge of the property, such as liquidators of an estate for example.

In return for the risk assumed by the buyer, the sale price is generally lower than it would be for a comparable property. Thus, the buyer who agrees to take an additional risk could benefit from a discount.

People who buy a property without a legal warranty of quality are informed that even if they discover a defect of which they was unaware, they will have no recourse against the seller unless they can show that the seller was acting in bad faith by voluntarily concealing a defect he knew existed.

The role of the real estate broker

The real estate broker has a duty to inform the seller and the buyer of the consequences of waiving the warranty of quality.

• This information must be included in the seller’s declaration;
• This information must appear in the detailed sheet of the property for sale;
• The clause ''This sale is made without legal warranty of quality, at the buyer’s risk.'' must be indicated in the promise to purchase.

SOURCE : CENTRIS.CA