Is it Risky to Purchase a House Without the Legal Warranty?

More and more homeowners are listing their properties without offering the legal warranty of quality. This approach has advantages and disadvantages, both for the seller and the buyer. Do you know which ones?

We notice a significant growth in the number of house sales without a legal warranty of quality over the past years.

What Is a Legal Warranty of Quality?
The Quebec Civil Code provides for legislation protecting real estate buyers from hidden defects. It requires that the seller disclose everything they know about their property at the time of sale. Failure to do so will allow the buyer to pursue legal action against the seller. In a transaction where the legal warranty has been waived, the sales contract includes a clause stating that the buyer will not have the right to file a lawsuit against the seller. Unless…

Not Totally Shielded From Legal Action

However, it is important to specify that, in some cases, the buyer retains the right to sue the seller. For the case to be heard in court, the buyer will have to prove that the seller was not honest and deliberately omitted facts during the transaction. The judge will decide whether the seller is liable (or not).

The Downside for the Seller: Not Finding a Buyer
For the homeowner, waiving the legal warranty of quality may give them some peace of mind as the buyer relinquishes their right to litigation if something goes wrong. Nevertheless, this also means that the property might stay on the market for a very long time; few people are inclined to roll the dice when it comes to real estate. This is the biggest drawback for a seller in this type of transaction.

The Upside for the Buyer: The Price

So why would a buyer choose a house without the legal warranty rather than one with it? Because of its attractive selling price. According to a study conducted by the firm JLR, the absence of a legal warranty of quality means a sale price drop of between 8% and 11% of the property’s assessed value. And this is only an average: some homes are put on the market at an even lower price. It must be noted though that homes sold with no legal warranty are not necessarily in poor condition. Often, the seller is simply an heir who has no idea of the true state of the residence and wants to protect himself from legal action. They could also be an elderly person moving to a seniors’ residence who wants peace of mind. In some cases, the buyer will end up with a great deal, while in others, they may be disappointed.

Important advice for Both Parties

—The Buyer:
To conclude a real estate sale with as few bad surprises as possible, do not hesitate to ask the seller and their broker questions. What are the reasons behind this lack of warranty? What problems is the seller aware of? Have the property inspected by a qualified professional. And don’t forget to carefully read through the Declaration by the Seller so you can buy the home in full knowledge of the facts.

—The Seller:
In this type of transaction, I advise the seller to be completely transparent when filling the Declaration of the Seller so as not to take any legal risks.

As you can see, in this type of transaction a broker is necessary to accompany and guide you. Whether you are a buyer or a seller, do not hesitate to contact me: 📲819-431-4942 / /