August 22, 2017 – The number of properties sold without the legal warranty is growing in Quebec. Without it, a buyer will not be able to exercise a recourse against his seller, should a latent defect unknown to the latter be discovered. On the other hand, if the former owner was aware of a problem, the buyer could then claim against him, because he has an obligation to declare it.
The legal warranty has two parts, one of which relates to the warranty of quality. Already, two years ago, the data showed a trend towards transactions without this protection that is to say, at the risks and perils of the buyer. These transactions mainly concerned financial foreclosures and, to a lesser extent, estate sales.
In 2016, some 20% of single-family homes were sold without the legal warranty, compared with 13% in 2012. These figures were compiled from the land register. In co-ownerships, it was excluded only in 5% of transactions in 2016, compared to 2% in 2012. These more conservative percentages can be explained by the fact that co-ownership is a more recent housing concept’. However, older properties are more likely to be sold without the legal warranty.
When selling their property, several sellers seek peace of mind, which is why they want the transaction to be without the legal warranty. Moreover, its absence has an undeniable impact on the price of a property. Depending on the year of construction, the premium for a sale with legal warranty varies from 8% to 11% of the value on the land assessment roll. For example, if the real estate value of a house is $ 300,000, the difference would be between $ 24,000 and $ 33,000. This being said, the legal warranty is strongly recommended in any type of real estate transaction. Not taking advantage of it can be costly to reckless buyers.
Montreal, August 22, 2017
Source: Les Affaires
