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Quebec Real Estate Bubble: Beware of Hidden Defects

The real estate market in Quebec is boiling over, with real estate prices having increased steadily for several decades, reaching new heights since the health crisis.

Indeed, in recent years, purchasing residential property has turned into a real bidding war among potential buyers under the watchful eyes of necessarily demanding sellers.

For the buyer, acquiring real estate requires unwavering patience; they must offer a price higher than the seller's asking price, after a brief few minutes tour of the coveted property. Indeed, the buyer is aware that the offered price does not match the market, but they do it in the hope of acquiring the much-desired property after visiting alongside about twenty other bidders. Additionally, the difficulty for the buyer lies in not knowing the prices offered by other competing buyers.

However, while at first glance the highest offer seems to be the best, it should also be the least burdensome for the seller. A potential buyer who proposes an attractive price might feel compelled not to request an expertise (such as pyrite, at the seller's expense) or not to insist on an inspection (generally at the buyer's expense). This is a judgment error.

The current rush and the haste with which sellers and buyers are engaging could become a considerable source of litigation in the coming months.

For the eager buyer not to request an inspection, even though they have only briefly visited the property for which they have made an offer, could be criticized in court. It is essential, in our opinion, to demand that a pre-purchase inspection be carried out with any offer. In the case of a hidden defect, if no inspection was performed, the court could potentially note the buyer's lack of diligence who only briefly visited the property. Seeking the annulment of the sales contract for a hidden defect will be particularly compromised; the defect could indeed be considered as apparent: "When the property shows a sign that allows suspecting the existence of a potential defect, the prudent and diligent buyer, who has not called upon an expert, must do so or otherwise satisfactorily check what is suspicious. If the buyer has already called upon an expert, the presence of signs indicating a potential defect obliges the expert to conduct a more thorough inspection. If he does not do so and a defect is revealed, the conclusion that the defect was not hidden will be imposed." (St-Louis v. Morin, 2006 QCCA 1643, para. 39).

A pre-purchase inspection, whose price is more than reasonable, must, despite the current rush to acquire residential property, be demanded by every prudent and diligent buyer.


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