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Articles in this section are of general information and in every situation are subject to the application and interpretation of a law, rule or factual situation that may differ. Consult us for any specific question.

One of the Seller’s Obligations: Guaranteeing the Right of Ownership of the Property Sold

1 March 2021

Are you thinking about purchasing property in the coming year? Are you wondering what the potential seller’s obligations are? Section 1716 of the Civil Code of Québec (hereafter: C.C.Q.) states that the seller is required to: 

  1. Deliver the property;
  2. Warrant the ownership of the property;
  3. Warrant the quality of the property.

These three obligations are defined as “legal warranties,” because they are created by the sole effect of the law, without it being necessary to mention them in the sales contract.[1] However, it is possible to sell without a legal warranty or to limit its effects. We invite you to read the article which can be found on our blog entitled “Hidden defects: Getting information to better protect yourself” to learn more about the quality warranty (warranty against hidden defects) and the exclusion of legal warranties.

In this article, we will focus exclusively on warranty of ownership rights.

Warranty of Ownership

Warranty of ownership can be summarised as follows: the seller is bound to warrant the buyer that the property they are acquiring is free of all rights except those declared by the seller at time of purchase.[2] The purpose of this warranty is to enable the buyer to have full enjoyment of the property they are buying.

Let’s illustrate this guarantee with an example: Let’s say you have purchased a plot of land to build your home on. You bought the land with a legal warranty. This is what your seller must guarantee you:

  1. That the land sold is free of all rights, except those declared to you at the time of sale (section. 1723, paragraph 1 C.C.Q.).

A servitude of right of way in favour of a third party may constitute one of the “rights” referred to under this section. Applied to our land purchase example, this means that your seller must assure you that there is no servitude of right of way on your land in favour of a third party. But what happens if you discover after the purchase that one of your neighbours has such a right-of-way over your land? Can you invoke the warranty under section 1723, paragraph 1 C.C.Q.?

Four conditions must be met in order to be able to invoke this warranty:

“The warranty set out in section 1723, paragraph 1 C.C.Q. is applicable if the right in question had arisen at the time of the sale, was not declared by the seller and was unknown to the buyer. Furthermore, the buyer must, in writing and within a reasonable delay, notify the seller of the right that may infringe on the buyer’s right of ownership.” (section  1738 C.C.Q.).. »[3]

Let’s go back to our example of a land purchase. In order to invoke the warranty of the right of ownership set out in section 1723, paragraph 1 C.C.Q., it is necessary that:

  • The right-of-way servitude established in favour of your neighbour already affected your land at the time of the sale;
  • The seller has not informed you of the aforementioned easement at the time of the sale;
  • You were not aware of the existence of this easement when the sale took place. It is important to note that an easement affecting a registered property, which has been published in the Land Register at the time of sale, is presumed to be known by the buyer.[4] The buyer must therefore be vigilant and verify certain details before buying, “as they will not always have recourse against the third party benefiting from the registered encumbrances.”[5] Although this listing in the register implies presumed knowledge of the servitude, the courts consider that the buyer still benefits from the warranty provided by section 1723, paragraph 1 C.C.Q. against the seller.[6] Please note that this rule is different in the case of movables.;
  • When you have become aware of the existence of this easement, you have reported this infringement of your property right to the seller in writing and within a reasonable period of time.

Please note that section 1723, paragraph 1 C.C.Q. also applies in the context of a sale of movable property.

  • That no hypothec is placed on the land purchased, except for the one you have decided to assume (section. 1723, paragraph 2 C.C.Q.);

Section 1723, paragraph 2 C.C.Q. is very clear:

The seller is bound to discharge the property of all hypothecs, even declared or registered, unless the buyer has assumed the debt so secured.

The seller “is bound to discharge the property of all hypothecs, even declared or registered, unless the buyer has assumed the debt so secured.” »[7]

Thus, “the buyer’s knowledge of the existence of a hypothec, whether by a declaration of the seller or by an entry in the registry office, does not release the seller from their obligation of warranty with respect to a hypothec.”[8] The only way for the seller to be released from this obligation is for the buyer to decide to assume the obligation secured by hypothec. Please note that “it is necessary for the buyer to have assumed the hypothec in writing. This assumption of the hypothec by the buyer is not presumed.”. »[9]

Your seller is consequently obliged to write off the hypothecs affecting the land purchased, even if you are aware of them or if they are registered in the Land Register, unless you have decided to assume the obligation thus guaranteed.[10] In the event you discover a risk of infringement of your right of ownership you shall, within a reasonable time after discovering it, give notice to the seller, in writing.[11]

Please note that section 1723, paragraph 2 C.C.Q. also applies in the context of a sale of movable property. 

  • That the land purchased does not encroach on the neighbours’ land, unless your seller has told you that there was such an encroachment at the time of the sale (section. 1724, paragraph 1 C.C.Q.) ;
  • That to the seller’s knowledge, prior to the sale, there was no encroachment by a third party on the land you have purchased (section. 1724, paragraph 2 C.C.Q.);
  • That the land does not contravene any public law restrictions, other than those that the seller has disclosed to the buyer, those that a prudent and diligent buyer could have discovered and those that have been recorded in the registry office. (section. 1725 C.C.Q.)

The seller must guarantee the buyer that the immovable complies with the limitations of public law, such as municipal zoning by-laws and laws and regulations “relating to expropriation, protection of agricultural land, cultural property and environmental quality.”[12] It is important to note that in order to be able to invoke this obligation of warranty against the seller, the immovable in question must contravene the public law limitations “at the time of the sale.” »[13].

Here are a few examples of the application of this vendor’s warranty obligation:

  • A house is built on the land you bought and the septic tank installed does not meet the environmental standards established by a law or regulation[14]
  • The previous owner carried out work without a permit;
  • Major restrictions prevent the construction of anything on the land you purchased.

Please note that section 1725, paragraph 2 C.C.Q. provides for 3 situations where the seller is not required to guarantee to the buyer that the immovable sold does not contravene public law limitations:

“The seller is not bound to that warranty where he has given notice of these restrictions to the buyer at the time of the sale, where a prudent and diligent buyer could have discovered them by reason of the nature, location and use of the premises or where such restrictions have been registered at the registry office.” »[15]?

Thus, to protect their rights, it is in the seller’s best interest to inform the buyer of any non-conformities affecting the immovable.

 Please note that section 1725 C.C.Q. applies only to the sale of immovable property.

What Recourse Does the Buyer Have if the Seller Contravenes the Warranty of the Right of Ownership (Asections. 1723 to 1725 C.C.Q.)?

It is possible to request, as the case may be, compensation by way of a reduction in the sale price, damages or even the cancellation of the sale. 

The buyer who discovers an infringement of their right of ownership that gives rise to the application of one of the sections from 1723 to 1725 C.C.Q. of the security of the right of ownership must react quickly. In most cases, the C.C.Q. requires the buyer who discovers such an infringement to notify the seller in writing within a reasonable period of time.[16] Remember that a buyer who does not comply with this condition may lose their rights.[17] This is why it is important to consult a lawyer promptly to ensure that your rights are preserved.

Do you believe that the seller has breached their obligation to warrant the right of ownership? Do not hesitate to contact our team. We will be pleased to analyze your case and provide assistance.

[1] Sect. 1716, para. 2 C.C.Q.

[2] Sect. 1723 to 1725 C.C.Q.

[3] Tougas v. Malo, 2018 QCCS 4952, para. 35

[4] Lessard v. Gagnon, 2018 QCCQ 7757, para. 33 to 36

[5] Louise LANGEVIN et Nathalie VÉZINA,Langevin, L. and Vézina, N. (2019). « La vente dans le cCode civil et la lLoi sur la protection du consommateur »,. dIn Collection de droit 2019-20, École du Barreau du Québec, (Vol. 6, Obligations et contrats,). Cowansville, Éditions Yvon Blais, 2019, p. 208.

[6] Id.

[7] Sect. 1723, para. 2 C.C.Q.

[8] L. LANGEVIN et N. VÉZINALangevin and Vézina, préc.,op. cit., note 5, p.209.

[9] Id.

[10] Grégoire sport inc. v. Ramsay, 2008 QCCA 519, para. 17 and 18.

[11] Sect. 1738, para. 1 C.C.Q.

[12] L. LANGEVIN et N. VÉZINA,Langevin and Vézina, préc.op. cit., note 5, p.213.

[13] L. LANGEVIN et N. VÉZINA, préc., Id., note 5, p.211.

[14] L. LANGEVIN et N. VÉZINALangevin and Vézina, préc., op. cit., note 5, p.213.

[15] Sect. 1725, al. 2 C.C.Q.

[16] Sect. 1738 C.C.Q.

[17] L. LANGEVIN et N. VÉZINALangevin and Vézina, préc.,op. cit., note 5, p.209.