Buying without legal warranty in Quebec: what does that really mean?
Buying without statutory warranty in Quebec: what does it really mean?
You find a property you like. The price is right, the location is good, and the tour is encouraging.
But in the description sheet, you notice a mention:
“Sale without statutory quality warranty”
Or:
“Without statutory quality warranty, at the buyer's risk and peril.”
Is it a red flag? Does that mean the property necessarily hides problems? And above all, what exactly are you giving up as a buyer?
A property sold without statutory warranty is not automatically a bad property. However, the words used in the clause can have important consequences on the protections and remedies available to the buyer.
What is the statutory warranty in real estate?
In Quebec, the Civil Code provides that the seller is normally required to guarantee to the buyer the right of ownership and the quality of the property. These warranties exist by operation of law: they do not need to be added to the contract for them to exist.
The statutory warranty therefore has two main components.
The right of ownership warranty concerns, among other things, rights affecting the property, certain mortgages, certain encumbrances, and certain limitations.
The quality warranty, on the other hand, is the one associated with recourses for latent defects.
In my File #005, I explained exactly how this quality warranty works, and in the File #006, we saw that a problem discovered after purchase is not automatically a latent defect.
But another question arises: can this warranty be renounced?
Yes.
Can a house be sold without statutory warranty?
The Civil Code of Quebec allows the parties to increase, decrease, or even exclude the effects of the statutory warranty in their contract.
That is why you encounter properties offered without statutory quality warranty.
This can happen, for example, in an estate or a foreclosure when the seller has limited knowledge of the property. The OACIQ also notes certain properties of poor quality or designated to be demolished among situations where a complete exclusion may be considered.
A seller may also wish to reduce the risk of a potential remedy after the transaction.
Consequently, the presence of a warranty exclusion is not by itself proof that the property is problematic.
It is better to understand why this condition is being requested and, above all, the exact scope of the proposed clause.
Do all “no warranty” clauses mean the same thing?
No, and that is probably the most important point of this article.
The OACIQ distinguishes, in particular, an exclusion aimed at the immediate seller's warranty from a complete exclusion containing the words “at the buyer's risk and peril.”
Why is this important?
Because a clause can be drafted in a way that excludes your current seller's warranty while allowing, when conditions are met, to preserve certain rights coming from previous sellers.
Conversely, the Quebec Court of Appeal has interpreted a complete exclusion “at the buyer's risk and peril” as having a much broader scope.
According to the OACIQ, it can cause the buyer to lose the warranty of their immediate seller as well as warranties from prior sellers, thereby interrupting the chain of transmission of those warranties.
That is significant enough for the OACIQ to strongly advise brokers not to automatically use a complete exclusion when the parties’ intent can be adequately reflected by a more targeted clause.
Just a few words in a purchase agreement can make a big difference.
What does “at the buyer's risk and peril” mean?
This expression deserves special attention.
Article 1733 of the Civil Code generally provides that a seller cannot exclude or limit liability for certain latent defects they knew or could not have ignored and did not disclose.
But this same article expressly provides an exception when a buyer acquires the property at the risk and peril of a non-professional seller.
Recent jurisprudence from the Court of Appeal has also clarified the scope of this type of clause. The OACIQ notes that in the absence of fraud, a complete exclusion can reflect the buyer's intention to assume the risks associated with defects that may affect the property.
That is why shorthand formulations should be avoided, such as:
“The seller knew the problem, so the no-warranty clause doesn’t count.”
A real situation can be much more complex.
The exact wording of the clause, the facts, the statements made before the sale, the available evidence, and the possibility of fraud may all be factors.
At this stage, we move beyond simple real estate simplifications: a contentious situation warrants a legal analysis tailored to the file.
Without statutory warranty, can the seller hide everything?
No.
A warranty exclusion should not be interpreted as a license to mislead the other party. The seller remains obliged to act in good faith and with transparency in the transaction.
The seller's statements therefore retain their importance.
In a residential transaction covered by the OACIQ forms, the form Seller's Declarations about the Property allows documenting several relevant details regarding the property's history and condition.
But when a warranty exclusion is present, the buyer's possible remedies can be very different from those in a transaction conducted with the statutory warranty.
That is why you must understand the clause before signing, rather than trying to understand its consequences once a problem has been discovered.
Should a property sold without warranty be inspected?
In my opinion, inspection becomes even more important.
The OACIQ nevertheless recommends that a buyer considering a property sold without quality warranty be advised to pursue a more thorough pre-purchase inspection than a standard inspection, and that the chosen expert be informed that the property is sold without warranty.
An inspection obviously cannot see through walls or guarantee that no problem exists.
It can however help reveal clues that justify additional verifications.
A crack, a moisture stain, an unusual modification, a recent repair, or information contained in the seller's declarations may, depending on the circumstances, justify the intervention of a specialist.
Less protection after purchase should generally lead to more checks before purchase.
What would I check before buying without statutory warranty?
I would begin by understanding exactly the proposed clause, rather than simply focusing on the words “no warranty.”
Then I would pay particular attention to the seller's statements, the pre-purchase inspection, the available documents, and the property's relevant history.
When an item raises a question, I would seek to delve into it before the buyer commits definitively.
And when a question goes beyond the broker's role, the right move is to direct the buyer to the competent professional: inspector, engineer, notary, lawyer, or other specialist depending on the situation.
That is precisely where I see my role as a broker: I do not replace these professionals. I help identify the questions worth asking and coordinate the verifications necessary to allow my client to make an informed decision.
So, should you avoid properties without warranty?
Not necessarily.
A property sold without statutory warranty can very well fit a buyer's project.
The important thing is that the buyer understands what they are buying, the protections they are renouncing, and the risks they are accepting.
And above all, one should not assume that all exclusion formulations produce exactly the same effects.
If you had to remember just one sentence from this survey, it would be this:
No warranty does not mean no verification.
Quite the opposite.
The more limited the protections, the more important it becomes to understand the documents, ask the right questions, and perform the appropriate verifications before signing.
File #007 resolved. 🔎
This article aims to simplify certain real estate and legal concepts applicable in Quebec. It does not constitute legal advice. Each situation has its own particularities and may require the involvement of a legal professional.