Here are some important principles regarding latent defects.

• A defect is not automatically covered by the legal warranty of quality (the warranty). It must meet four conditions: it must be (i) present at the time of sale, (ii) unknown to the buyer, (iii) serious, and (iv) hidden.
• The existence of a mere non-conformity with the National Building Code of Canada does not automatically constitute a latent defect if it does not result in any consequences regarding the buyer’s normal use of the property.
• The warranty allows a buyer to obtain a reduction in the sale price or, in the case of very serious defects, the annulment of the sale.
• The warranty is not a replacement value warranty. When the buyer requests a price reduction from his seller under the warranty, the reduction he may be entitled to does not automatically equal the full cost of corrective work: a depreciation, sometimes significant, can apply, especially when the building is old.
• Wear and tear and obsolescence are not covered by the warranty.
• The warranty applies, regardless of whether the seller was aware of the existence of defects or not.
• When discovering a defect, the buyer must denounce it, in writing, to his seller to allow him to observe the defects and the damages caused by them. This notice must be transmitted within a reasonable delay. The reasonable nature of the delay to denounce a defect is assessed on a case-by-case basis.
• A seller can, through his false and/or erroneous representations to the buyer, even if made in good faith, may render an apparent defect legally hidden.
• In conclusion, even when selling without a warranty, a seller may still incur liability towards the buyer if he failed to disclose, at the time of sale, any determining element of which he was aware, and which could objectively affect the value of the sold property and which the buyer could not have detected on his own before the sale. Specifically, the exclusion of warranty does not protect the seller from the consequences of his intentional or gross fault.

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