Is a Seller, Who Sold an Immovable in 1985, Went Bankrupt in 1987, and Was Then Discharged from Bankruptcy in 1988, Liable for Latent Defects First Discovered in the Immovable in 1998?

This post, published on Éditions Yvon Blais’ blog on latent defects on November 17, 2016 (FR), which discusses the judgment in Axa Assurance inc. v. Immeuble Saratoga inc. (Full Text | Fiche Quantum), reminds us that a seller’s bankruptcy and subsequent discharge do not have the effect of extinguishing the legal warranty of quality against latent defects resulting from an act of sale concluded before the seller’s bankruptcy for latent defects discovered by a buyer after the seller’s discharge.

In order for a seller who sold an immovable before his bankruptcy (and his subsequent discharge) to be released of his obligations under the legal warranty of quality from the sale of this immovable, the claim for latent defects must have existed at the time of the seller’s bankruptcy or on the date of his discharge, or it should at least be possible at that time to reasonably suspect the existence of the defects in question.

Therefore, if the defects have been discovered by the date of the seller’s bankruptcy or discharge, the buyer’s claim against the seller for these defects will constitute a provable claim in the seller’s bankruptcy within the meaning of the Bankruptcy and Insolvency Act, such that the bankrupt seller will be, in principle, released of his obligations as seller in terms of the legal warranty of quality following the issue of an order of discharge.