Legal warranty of ownership and quality

What is a ''legal warranty''? A person selling movable or immovable property must warrant that the property is free from any defect in title and any latent defects, except those declared before the sale. That is what is generally known as the ''legal warranty'', which has two components, i.e. the warranty of ownership and the warranty of quality. These warranties exist by operation of law, i.e. they do not have to be specified in the contract.

The warranty of ownership

The warranty of ownership assures the buyer that:

• the property is free of all rights except those declared by the seller;
• the seller has discharged the property of all hypothecs, except for those assumed by the buyer;
• the property is not subject to any encroachment on the part of the seller or a third person; and
• the property does not violate any restrictions of public law, except those declared by the seller or those that the buyer should have discovered.

The warranty of quality

Under the warranty of quality, the seller warrants the buyer that the property is free from defects, existing at the time of the sale, that would render it unfit for the use for which it is intended or which would so diminish its usefulness that the buyer would not have bought it or paid so high a price if he had been aware of them. The seller is not bound, however, to warrant against defects known to the buyer or a defect that a prudent and diligent buyer could have perceived. This is why it is so important for a buyer to have a prospective purchase inspected by an expert. The fact that the seller is unaware of the defect, or that the defect does not become manifest until after the sale, in no way reduces the warranty. However, if the seller was aware of the defect, his liability would be increased to include, in addition to the reduction in value of the immovable, all other losses sustained by the buyer.

Waiving the legal warranty of quality

The legal warranty may be increased, reduced, limited in time, or even waived upon agreement between the parties to a transaction. Except in rare cases, waiving the warranty of ownership (warranty of title) is never recommended. A more frequent occurrence is the waiving of the warranty of quality, including when an immovable is sold by an estate or following repossession.

Under certain circumstances, it may even be a good idea to recommend to a seller to sell without a warranty of quality. This could be the case when selling the property of an elderly person who does not want to worry about a potential recourse for a latent defect on the part of the buyer, a recourse which could be exercised against the person’s estate.

Read the full article on the OACIQ website.