Buying or selling property comes with a unique set of considerations, particularly around the concept of "legal warranty." This term is vital in real estate transactions, as it can protect a buyer against hidden defects and ensures that the seller has a valid title. In Quebec, when selling an immovable, the law automatically applies two forms of legal warranty, unless explicitly excluded. It is important to distinguish between these two types of warranties and how they apply to the sale of a property.

1- Warranty of Title or Ownership: 

The seller guarantees that they have the legal right to sell the property and that the title is free from encumbrances, such as unpaid mortgages or liens, and that no other parties have any legal claims to it (except those disclosed).

2-Warranty of Quality: 

This warranty protects buyers from defects that existed at the time of sale but were not apparent or known to the seller. They must also significantly diminish the property's value or make it unfit for its intended use. Examples include serious structural issues, significant water damage, or hidden mould problems. 

There are measures that can be taken to reduce or minimize the risk of problems related to title and ownership, such as title insurance. However, the legal warranty of ownership is rarely, if ever excluded. For the purpose of this article, we will focus on the legal warranty of quality and its implications.

In Quebec, the legal warranty of quality is designed to protect buyers from hidden defects. On the surface, this seems like a fair and reasonable safeguard. For buyers, it often is, but for sellers it can be something else entirely… a major source of risk and uncertainty.

Here’s the issue. If you buy a home in 2015 that was originally built in 1952, and then decide to sell it in 2025, you could still be held responsible for a defect that has existed for decades, even if you had no idea it was there. Unless you specifically exclude the legal warranty of quality from your sale, you could be liable for hidden problems that may have originated long before you ever owned the home.

That’s not just frustrating, it can feel downright outrageous. Why should a seller be expected to guarantee the condition of a home they did not build, and which may have changed hands several times before them?

More and more sellers are starting to ask this exact question. And in response, many are choosing to exclude the warranty of quality altogether.

For buyers, this can sound alarming at first. The legal warranty offers peace of mind, and it is easy to assume that removing it means the seller is hiding something. But that is not necessarily the case. Sellers are still required to disclose any defects they know about, and the exclusion of the warranty does not give anyone the right to deceive. 

Buyers still have the opportunity to conduct inspections, ask questions, and negotiate on price or terms. In cases of fraud or intentional non-disclosure, the courts still offer protection. In fact, we have seen firsthand how the inclusion or exclusion of the legal warranty can become a key part of the negotiation process

.In one case, Team Broady was representing the buyer. The seller had listed the home without legal warrant of quality, which raised some concern. We submitted our offer with the warranty added in. The seller countered by removing it again. We made a final proposal: $975,000 with the legal warranty included, or $925,000 without it. The seller chose the lower price and sold without the warranty. In the end, the buyer was happy with the discount, and felt comfortable taking on the risk.

In another case, we were representing the seller. The property was being sold with the legal warranty in place. After conducting their inspection, the buyer started raising red flags, requesting additional invasive inspections and becoming increasingly picky. We got a bad feeling. Rather than invite future conflict, we agreed to a price reduction, but excluded the warranty in the revised offer. The buyer accepted. The seller was happy to get the deal done, and more importantly, relieved to no longer carry the risk of being held responsible for any future discoveries

These examples show that there is no one-size-fits-all answer. It depends on the property, the parties involved, and the circumstances of the deal.

None of the other Canadian provinces offer anywhere near the same level of protection to buyers. Quebec is unique in this sense, with the default inclusion of the legal warranty of quality. In the rest of Canada, the principle of “buyer beware” still reigns. Sellers are not automatically liable for defects unless they were aware of them and failed to disclose. In Quebec, unless the warranty is explicitly excluded, liability can extend well beyond what most sellers consider reasonable

.We feel it is time for a broader conversation about what is fair and who should bear the risk. Because while buyers deserve protection, sellers also deserve peace of mind once the transaction is done.

The Concept of “Chain of Custody”

The concept of “chain of custody” in real estate refers to the historical trail of ownership for a property. When a hidden defect is discovered after the purchase of a home sold with legal warranty of quality, the buyer’s first instinct is usually to hold the seller they bought from accountable. But in some cases, the real responsibility lies further back. We once had a client who purchased a home and began renovating the ensuite bathroom. When their contractor removed the flooring, they discovered that a previous contractor had cut through the structural floor joists to run plumbing drains, a shocking and dangerous shortcut. A structural engineer confirmed the damage, and the repair costs doubled the renovation budget. The buyer went after the seller, who insisted they had never touched that bathroom. Thanks to a well-documented chain of custody, the buyer was able to track down the previous owner, who had completed the work. That former seller ultimately agreed to settle out of court. Without a clear trail of who owned the property and when, that kind of resolution would not have been possible. When selling with legal warranty, maintaining good records and understanding this chain of custody becomes even more important.

Complete exclusion of the legal warranty of quality

In a 2022 decision, the Quebec Court of Appeal ruled that the complete legal warranty exclusion clause (“sold without legal warranty of quality at the buyer’s own risk”) means that the buyer is purchasing the immovable without any warranty whatsoever. The buyer waives not only his immediate seller's warranty, but also all warranties offered by previous sellers. This clause breaks the chain of custody of the legal warranties. The next buyer who purchases the same property, now with legal warranty, must be aware that it is granted solely by his immediate seller. He will not be able to benefit from the warranties granted by previous sellers, since his immediate seller had interrupted the chain of custody of warranties by purchasing "at his own risk."

Possibility of waiving the immediate seller's legal warranty only

The buyer and seller may agree to waive the warranty from the immediate seller only, but not the warranties granted by previous owners. In this case, it is particularly important that a clear and unequivocal clause reflecting the intention of the parties be included in an offer. An experienced real estate broker will be able to advise on this.Your broker may therefore recommend that such a clause be included to protect the seller from legal action for latent defects and the buyer would still retain his recourse against previous sellers (provided that they sold with the legal warranty of quality).

At TEAM BROADY, we help our clients navigate every detail of the legal warranty, whether it’s protecting your interests as a buyer or managing risk as a seller. If you’re thinking of making a move, let’s talk. Reach us at 514-613-2988 or info@teambroady.ca.