The legal warranty of quality and latent defects: some important concepts

This article, which was published in Les Affaires on March 24, 2018 (FR), outlines some important rules in matters of latent defects.

• A defect is not automatically covered by the legal warranty of quality. For the defect to be so covered, it must meet four conditions: it must (i) exist at the time of the sale, (ii) be unknown to the buyer, (iii) be serious and result in a deficit of use, meaning the property is unfit for what a reasonable buyer would have expected to use it for, and (iv) be latent.
• A simple non-compliance with the National Building Code does not automatically constitute a latent defect if it does not impact the buyer’s ability to use the property.
• The legal warranty of quality allows a buyer to obtain a reduction of the sale price or, in the event of serious defects, the annulment of the sale.
• The legal warranty of quality is not a warranty for the value of the property brand new. When the buyer requests a reduction of the sale price, the reduction to which he will be entitled will not automatically equal the cost of the corrective work: depreciation must be taken into account in consideration of the defective component’s age in relation to its total operating life, in order to avoid the buyer’s enrichment at the seller’s expense.
• Normal deterioration due to age is not covered by the legal warranty of quality. For example, a French drain that is dysfunctional due to its age will not, in principle, be considered a defect covered by the legal warranty of quality.
• The legal warranty of quality applies regardless of whether the seller was aware of the defects.
• When the buyer discovers a defect, he must notify the seller in writing to allow him to come and see the defects and the damage caused and to correct the situation. This notification must be done within a reasonable time period. While many refer to a six-month period as the rule of thumb, the reasonableness of the time period is assessed on a case by case basis.
• A seller may, by his misrepresentations and/or erroneous statements, even when in good faith, turn an apparent defect into a latent defect for the purpose of the law’s application.
• Even when selling without legal warranty, a seller may nonetheless incur liability to his buyer if he fails to disclose any key elements of which he is aware that objectively affect the property sold and/or its value and of which the buyer is not aware. Specifically, the exclusion of the legal warranty does not protect the seller against the consequences of his gross or intentional fault.

We invite you to visit our blog on latent defects as well as our publications on real estate law on our website.