Selling without a legal warranty
Generally, homes are sold without a legal warranty (warranty of quality) during an estate sale, when taken back by the bank (foreclosure), when the property is older, or when the homeowner doesn’t want to be held liable for defects they are unaware of or wants to avoid potential hassles for their inheritors.
This must be clearly stated in the Declaration of the Seller and the Offer to Purchase. It will then be included in the deed of sale. A notary is the best person to draft this clause, to ensure it is compliant and meets the seller and buyer’s needs.
Advice from a notary
The notaries on DuProprio’s team recommend that our clients write the following (based on section 1733 of the Civil Code of Quebec) in clause 8 of the Offer to Purchase form: “This sale is made without legal warranty, at the buyer's risks and perils.”
Clause’s limitations
You should be aware that this clause does not exempt you from declaring the defects you are aware of. It only means that the buyer will not be able to initiate legal proceedings against you if a hidden defect (i.e., a defect that is not discernable at the time of purchase but that interferes with the normal use of the property and generally decreases its value) is discovered after the sale.
This clause also does not release you from the obligation to comply with the requirements of the law and to refrain from deceiving the buyer. The buyer could have recourse against you if they can prove that their consent was influenced by the deceit of a seller acting in bad faith. In other words, the buyer must show that they only agreed to the transaction after being misled by trickery or falsehoods, or due to the seller’s reluctance to disclose an element essential to the agreement.
Including the mention in your listing
You are not required to indicate that you are selling without a legal warranty in your listing, but there are some advantages to doing so. Being open and honest from the start could make your property enticing to buyers looking for a good deal and will bring you buyers who are truly interested in your property as it is. You will therefore avoid calls and visits from people who are not inclined to purchase under these conditions.
FAQ
What is a legal warranty?
Under the Civil Code of Quebec, the legal warranty provides buyers with protection against hidden defects, i.e., a fault or problem in the property that wasn’t discovered at the time of the sale. This warranty exists under the law, so it doesn’t have to be included in the offer to purchase.
As a general rule, the Declaration of the Seller is an excellent way to inform the buyer of your property’s condition. The defects you declare in this form cannot be considered hidden. For the warranty to apply, the buyer must also show that they did their due diligence during the purchase, for instance by having the property inspected by a professional.
Does selling without a legal warranty affect my price?
It is difficult to determine the exact value of a legal warranty. Several factors can come into play, such as the buyers’ confidence about the property, and the property’s condition or age. A buyer who will not have the recourse of a legal warranty will likely expect to pay less than for a comparable property.
Do I need to specify that the items included in the sale do not come with a legal warranty?
Inclusions are generally negotiated during home visits or when drafting the offer to purchase. You don’t need to say anything in your listing. However, make sure the items are properly listed in clause 7.4 of DuProprio’s Offer to Purchase form. Do not hesitate to contact our team of notaries* if you need assistance.
* Depending on the package selected.
What does “Perfect for DIY enthusiasts” mean?
The “Perfect for DIY enthusiasts” note in a listing sends a clear message to potential buyers that the home will need work to reach its full potential. However, this term has no legal value, so buyers can still benefit from the legal warranty against hidden defects, and sellers have a responsibility to declare known defects in the property.
Legal notice
The information on this page does not constitute a legal opinion and must not be construed as such, nor reproduced. It is provided for informational purposes only. It is advisable to consult a notary to obtain a legal opinion on a given situation information.