A real estate broker is not bound by the legal warranty of quality, but may incur civil liability if he commits a fault towards either of the parties involved in the transaction

This post, published on Éditions Yvon Blais’ blog on latent defects on February 20, 2018 (FR), discusses the judgement in Mainguy v. Courchesne (Full Text | Fiche Quantum) where the seller who was sued by his buyer for latent defects called his real estate broker in warranty, contending that his real estate broker had committed a contractual fault by poorly advising him when completing the seller’s declaration, failing to correct this declaration when he found that there was no question as to the state of the retaining wall, and not having informed the buyers of the retaining wall’s problem, as he had undertaken to do.

Finding in particular that the retaining wall’s problem constituted a latent defect, the court concluded that the seller’s real estate broker (the listing broker) hid the defect, of which he was aware, from the buyers before the sale, namely the problem with the retaining wall, and that he did not inform the buyers before the sale, therefore committing a fault for which he incurred his civil liability towards the seller. Specifically, the court found the broker’s omission to be the origin of the seller’s fraud.

Consequently, the seller’s recourse in warranty against his real estate broker was allowed and the broker was ordered to reimburse the seller for the cost of repairing the retaining wall, which the latter must pay to his buyer.

In this case, the seller was also ordered to compensate his buyer for the presence of 52 feet of cracks in the foundation, which the court deemed to be latent defects covered by the legal warranty of quality. However, the court did not hold the real estate broker liable in the context of the buyer’s recourse in warranty against him, as the broker is not responsible for latent defects.

Specifically, only the seller is responsible for the legal warranty of quality. Therefore, a real estate broker cannot be held responsible on the basis of the legal warranty of quality. However, he may incur civil liability towards either of the parties involved in the transaction if he commits a fault that causes them damage.