So you just purchased your first home. Congratulations. It’s a great feeling to finally enter the real estate market, isn’t it? One thing that can definitely put a damper on this fuzzy feeling, however, is discovering a hidden defect in your brand new home.
It seems that in northern countries, such as Canada, there are numerous cases of cracked foundations, water damage caused by snow or heavy rain. If you visit a house in the winter, it is often difficult to see cracks in the foundation as the walls are typically covered in snow. You may encounter mildew and all types of things you hadn’t even heard about before searching it in Google…
Legally speaking, there is something to be done. Had you been aware of this defect in the first place, perhaps you would not have purchased the house, or perhaps you would not have paid that large amount of money for it. You should therefore try to get some type of compensation. Here are a few tips on how to react and prepare a claim for a hidden defect.
Take notes and take pictures of the hidden defect
Once you discover a hidden defect, also called a “latent defect”, it’s essential to document things to the best of your abilities. If it is a plumbing defect for example, ask a plumber for his advice. Ask him to describe and write down the defects he finds. When you send a demand letter to the seller, you can attach the plumber’s analysis to explain your request. Take photos and build a case.
Send a notice to the seller of the hidden defect
Following the discovery of a hidden defect, it is important to send a notice to the seller as soon as possible explaining the nature of the defect. The notice must give a reasonable period of time for the seller to come and verify the existence of the defect, assess the damage and allow him to rectify the situation himself.
If it is urgent to repair the damages you should and can do them now. This is specialy important if those defects can cause other problems. You should always try and minimise the overall damages even if you think these are hidden defect.
In any case the notice is important in many jurisdictions because it pinpoints the date from wich the defects were noticed and from when the other party had the chance to repair them. Inconviniences from that point in time are amounts could be added to a futur demand.
Practical tip: time is of the essence. Of course we recommend that you send a well written notice, but it is more important that you send it quickly. Send a letter and and email if you can.
Negotiate with the seller
As mentioned in the preceding paragraph, the purpose of the notice sent to the seller is to give him the chance to rectify the situation and correct the defect. Take advantage of his visit to try and reach an agreement with him about how to correct the situation. For example, if he recognizes the defect but doesn’t have the financial means to rectify it immediately, you can, for example, offer him to pay in his place and require a reimbursement over time. Put everything in writing and sign the agreement. This is a contract and its existence will serve as evidence in case he doesn’t fulfill his obligations.
Send a demand letter
After notice of the hidden defect, if the seller is still refusing to cooperate or rejects the existence of the defect, it will then be necessary to send him a demand letter, prior to preparing your legal claim.
If you didn’t already send a notice, sending a demand letter will carry the effects that notice. In other words if you send a demand letter you don’t need to send a notice. If you think that it will take you time to write or send a demand letter, we recommend you send a notice before.
If you’r sending a demand letter without a notice you can include a reasonable period of time for the seller to come and verify and rectify the situation himself.
It is highly recommended to wait until the time limit set out in the notice is reached before undertaking any repairs, unless the repair work is urgent. The seller will then be able to note the defect before it’s repaired and can take charge of the repairs in his own way.
A claim for a hidden defect, if successful, will only reimburse the actual defect itself, rather than the defect as well as the damages that this defect has caused. For instance, repairs to your cracked foundation will be reimbursed but you won’t see a dime for the water damage that the same cracked foundation caused.
Hire an expert
When it comes to hidden defects, your demand letter must clearly state what the seller did wrong, what are the damages that were caused by the defect and what is expected from the seller to remedy the situation. In order to properly identify the damages, it is wise to contact an expert in the particular field where the damage occurred. This expertise will help assess the value of the damages, provide credibility, and it will help you all along the legal process should you chose to eventually follow that path.
Start a legal action
Following your demand letter (and if the seller doesn’t get back to you within the provided timeframe), you can make a legal claim in a court of law. Most cases end up in small claims court, where the maximum amount varies from one province to the next. For instance, in Quebec, it is $15,000. In Alberta, it is $50,000. Should the damages be higher than what small claims permits, you can sue at a higher-level court.
Remember that using a lawyer for amounts below $20,000 can be ill advised. It could cost you more in legal fees than what you will get from the other party. Try using online tools to limit your costs and do part of the work yourself.