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P

eople used to say 'Buyer Beware'. Now many people thinking of selling their homes are afraid that this should be 'Vendor Beware.' Hidden defects have become bogeymen that cast shadows over what should be pleasant and even fun.

The Civil Code defines a hidden defect as a defect that the Purchaser could not have known about but was nevertheless present at the time of sale. Whether the Vendor knew about it or not is not addressed, and is not the point. The Vendor is presumed to be selling in good faith; in fact all actions and transactions are presumed to be made that way. Subsequent laws only seek to define good faith. For that reason the Civil Code further defines a hidden defect as one that the Purchaser could not have seen in an inspection of the property. That means if the Purchaser didn't see it and no-one pointed it out, it could very well be a hidden defect. The onus is on the Vendor to make sure that the Purchaser hasn't overlooked anything.

The logic of this seems to escape a lot of people. Let's suppose you just sold your property to your sister and, willingly, you went over the house painstakingly with her. She accepted to pay the price you were asking and went to a lot of effort to borrow the money to pay you. You had owned the house for ten years and you explained everything of which you were aware. A month after she moved in, the water stopped working, and after investigation, it was discovered that the electric cable that kept the pipes from freezing between the well and the house had been damaged when a ditch had been dug around the garden. You didn't know. The gardener didn't know. The water is still frozen and the pipes have cracked. Now it's going to cost a few thousand dollars to repair the problem in mid-winter. It's a pain, but what can you do? All you can do is fix it. It's no-one's fault and no-one tried to hide it, but you don't want it to come up at every family get-together in the future either.

The sense of the law is to encourage you to describe the property to any buyer as concisely as you did to your sister, and to understand that if something unforeseen, such as described above, should come up after the sale, you have the responsibility to remedy it.

Where the hidden defects rules cause the most confusion is during the marketing. People tend to feel that a Purchaser won't buy if s/he learns about all the problems, or s/he will offer a much lower price, so they want to keep the problems out of the way until the last possible second. As a result, something runs the risk of being forgotten.

It is not a good marketing strategy to do things that way. It is better to be upfront and describe the problem or problems if you do not wish to repair them. It is a better strategybecause the Purchaser is aware that your price has been calculated in consideration of your knowledge of the property. If you do not declare a problem until after the price is accepted, the Purchaser has a right to believe that you feel that the property is worth the price you accepted with everything in good working order, as you described it. Subsequently, should an inspector discover the problem, the Purchaser must presume that you weren't aware of it, and that therefore both you and s/he have discovered something that should affect the price.

It is also better business. There is usually some tension in the dickering over price and terms and there is a need to rebuild the frayed nerves that may have resulted from these negotiations. As the signing approaches, no- one wants unpleasant surprises. The Purchaser is usually as anxious about his decision as the Vendor is, and there is a need to make common cause so that there is a willingness on the part of both parties if something unexpected comes up.

Every property has some defects, and there is neither peace nor merit to be found in letting them become bogeymen. Selling or buying a home should be a pleasant experience, and it will be as long as the parties can take every step with their eyes open.

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