What is a hidden defect?
A hidden defect is a problem with a home that was not disclosed to you before buying it.
For a defect to be considered hidden, it must satisfy the 4 following criteria:
- It is serious enough to affect the sale price of the home.
- You didn’t know about the defect when you bought the house.
- It would not have been possible for a careful and diligent buyer to know of its existence.
- It existed at the time of purchase.
The 3 steps to take in case of a hidden defect
Whether or not the seller was aware of the defect at the time of sale, he is still responsible for it. You can therefore take legal action against him.
Be sure to call a lawyer for assistance and to make sure your rights are protected.
What about “sold without legal warranty”?
Know that it is possible (although very difficult) to sue the seller even if you purchased the home without a legal warranty.
1. Telling the previous owner
The first thing to do when you find a hidden defect is to notify the previous owner in writing.
You must do so within a reasonable time after discovering the defect.
What is reasonable? Unfortunately, the law isn’t clear on this, but in general, you should have sent the notice within 6 months of discovering the defect.
This period could be extended if, for instance, the defect only appears on a seasonal basis.
Making repairs or not?
It’s better to wait a while before starting renovations at your own expense, unless:
- The residents’ security is at risk
- The hidden defect will cause major damage
- The hidden defect will result in the loss of the home
Remember that you have to give the previous owner time to verify your allegations and to repair the defect.
Must you send a demand letter to the seller?
Sending a demand letter is strongly recommended when you think that suing the previous owner is your only recourse or if you want to make sure the repairs are done immediately.
A demand letter is also the starting point for indicating your terms and conditions and any additional compensation you feel is warranted.
In a demand letter, you must clearly describe the hidden defect and the desired solution (and the deadline by which to execute the proceedings):
- Having the expenses paid out-of-pocket to repair the defect reimbursed
- Getting the seller to pay for the repairs
- Replacing the property
- Cancelling the contract and reimbursement request
- Having the difference between the actual value of the property and sale price refunded.
2. Finding common ground
At this step, the previous owner must either respond to your notice or demand letter.
Don’t exclude the possibility of a negotiation. The previous owner may not accept all of your demands.
If you reach an agreement, make sure to get it in writing.
Obviously, this agreement becomes a binding contract that must be respected by both parties.
3. Taking legal action
Consider this your last resort.
You can take legal action against the previous owner if:
- You are unable to reach an agreement.
- The previous owner failed to rectify the situation or respond to your demand letter by the prescribed deadline.
Please note that you have 3 years from the time you discover the hidden defect to take legal action (not from the purchase date).
Once in court, you will be able to sue for damages if you can prove that the seller knew or could not have been unaware of the hidden defect and that he omitted to tell you so as not to void the sale.
In any case, be polite and stick to the facts.