In the presence of a hidden defect, it is always necessary, before undertaking the work, to report it to the seller within a reasonable period of time.
Buying a building with legal warranty provides certain rights, but they must be exercised in accordance with the rules set out in the Québec Civil Code.
An insurer, subrogated to the rights of its insured, initiates legal proceedings against the sellers of its insured who have been compensated for a loss of over $165,000.
Let's review the facts:
- May 2008, the building is purchased;
- November 2008, the building is damaged in a fire;
- February 2009, the renovation works are completed;
- May 2009, the insurer, acting on behalf of its insured and alleging hidden defect legal warranty, demands that the sellers reimburse the indemnities paid;
- February 2011, the insurer, invoking the legal warranty, appeals to the Court* and initiates legal proceedings against the sellers of the insured.
After ruling that the insurer has no more rights than its insured, the court declares that the insurer, like any purchaser (insured) who discovers a hidden defect, must give notice to the seller before even proceeding with the repairs. Such notice allows the seller to assess not only the amount of work to be done, but also the origin of the loss. Therefore, the court rejects the insurer's claim since no notice was given to the sellers before the work was undertaken.
In the presence of a hidden defect, why run the risk of losing one's claim against the seller? It is always advisable, before undertaking any work, to report it to the seller within a reasonable time, unless the building is "threatened with immediate decay".
*CA 500-09-022916-126
