The Law provides that a buyer who discovers that a property is affected by a defect must, in writing, report it to the seller within a reasonable timeframe from its discovery[1].
I. When does the period begin to run?
The period for reporting the defect begins to run either (i) when the defect appears gradually or (ii) on the day the buyer was able to suspect its severity and extent[2].
The existence of a defect is therefore not sufficient in itself to give rise to a buyer’s recourse. Recourse based on the legal warranty effectively requires the buyer to report the defect to the seller, in writing, within a reasonable timeframe of its discovery[3].
However, although the Law specifies that a written notice is required, recent case law tends to accept the lack of written reporting when the purpose of such a notice is nonetheless achieved.
II. What is the objective of the notice of defect?
Sending a notice of defect constitutes a warning to the seller, informing them that the buyer is dissatisfied with the purchase and seeking satisfaction[4].
The notice of defect allows the seller to analyze the situation and evaluate the amount of the loss, its origin, the nature of the required corrections, and the extent of their liability regarding damages[5].
Reporting also aims to allow the seller to fulfill their warranty obligation. They have the right to examine the property and have it appraised if necessary to ensure that the defect indeed existed at the time of sale and, if possible, to remedy it[6]. Just because the buyer alleges that the property is affected by a defect does not mean the seller loses their rights[7]. The seller has the right to take action. They can verify the truth of the buyer’s allegations, the condition of the property, or preserve certain evidence that may be useful if they decide to take no action[8].
III. What is the required form for a notice of defect?
For many years, a written form with proof of receipt was considered the only way to report a latent defect. Even today, this procedure is recommended by lawyers as it limits any possible ambiguity regarding the evidence demonstrating that the buyer meets the legal requirements for their obligation to report the defect to the seller.
More recently, the courts have decided that a verbal report could fulfill the requirements of Article 1739 of the Civil Code of Quebec, even though this provision stipulates that the report must be in writing. However, it is up to the buyer to prove that the seller was warned of the presence of a defect[9]. Although a verbal notice may be valid, there could be an evidentiary issue regarding the report if, for example, the seller denies receiving such a verbal notice. It must be remembered that the burden is on the buyer to prove that the seller was warned of the presence of a defect.
IV. Absence of reporting
Failure to provide a notice of defect, whether verbal or written, can prove fatal to the buyer’s legal claim. For this to be the case, the consequences of the failure must constitute a real prejudice for the seller, and not merely a legal prejudice[10]. Prejudice is real if, for example, the buyer takes the law into their own hands by correcting/repairing the defect[11] without reporting it to the seller and without providing formal notice to fulfill their warranty obligations[12]. In this specific context, in the absence of real prejudice, a late report could be deemed sufficient.
Note that the failure to report the defect is not fatal, particularly in cases of (i) emergency: if the buyer must proceed with corrective work because the property is threatened with immediate deterioration, (ii) if the seller has already repudiated their liability regarding the defect, or (iii) if they have waived the right to invoke the notice[13].
In summary, the objective of reporting is to inform the seller of the presence of the defect. If the objective is achieved, the lack of a written notice may be excused[14].
In any case, to avoid facing any obstacles that could limit a latent defect recourse, the advice of a real estate lawyer will be beneficial.
References
[1] Civil Code of Quebec, CQLR c CCQ-1991, art. 1739.
[2] Idem.
[3] Laquerre v. Joseph, 2016 QCCS 5; Roy v. Dumas, 2020 QCCQ 149.
[4] Idem.
[5] Optimum, société d’assurances inc. v. Trudel, 2013 QCCA 716.
[6] Claude Joyal v. CNH Canada Ltd., 2014 QCCA 588; Nadeau v. Mercedes-Benz Canada inc., 2016 QCCS 7; and others.
[7] Béique v. Rodier, 2009 QCCS 1649; Arial v. Côté, 2015 QCCQ 6598.
[8] De Santo v. Viacroze, 2015 QCCS 5460.
[9] Roy v. Dumas, 2020 QCCQ 149.
[10] Claude Joyal v. CNH Canada Ltd., 2014 QCCA 588; and others.
[11] Immeubles de l’Estuaire phase III inc. v. Syndicat des copropriétaires, 2006 QCCA 781.
[12] Dupéré v. Mazda Canada inc., 2011 QCCQ 9537.
[13] Lemay v. Bérubé, 2016 QCCS 4947; Roy v. Dumas, 2020 QCCQ 149; and others.
[14] Guy Brière Courtier d’assurances inc. v. Riendeau, 2014 QCCA 1809; Roy v. Dumas, 2020 QCCQ 149.
