Since June 10, 2022, revolutionary legislation on real estate brokerage has come into force, radically transforming the way brokers engage with their client's buying process. This new law expressly prohibits real estate brokers from representing both buyer and seller in the same transaction, considered a clear conflict of interest.
Understanding legal warranties in real estate transactions
When embarking on a real estate transaction, it’s crucial to understand the subtleties of the legal warranties that protect both buyers and sellers. This article explores the essential aspects of legal guarantees in real estate, as defined by the OACIQ, the organization overseeing the practice of real estate brokerage in Quebec.
- 1. The Importance of the Legal Warranty
The legal warranty, automatically included by law in every real estate sale, is divided into two main components: the warranty of the right of ownership and the warranty of quality.
b. Quality guarantee
A- This guarantee assures the buyer that the purchased property is free of all rights, except those already declared by the seller, and that it is not subject to any encroachment or restriction not previously mentioned. It also guarantees that the property will be free of any mortgage not assumed by the buyer.
B- This warranty protects the buyer against latent defects that could render the good unfit for its intended use or significantly diminish its value. It is important to note that the seller is not obliged to guarantee against defects known to the buyer, or those that a diligent buyer could have discovered.
- 2. Pre-sales and pre-purchase inspection
Inspections are a key element in the real estate buying process. The OACIQ strongly recommends pre-sale and pre-purchase inspections to better inform the parties and avoid future disputes. These inspections help determine the actual condition of the property and inform the buyer of any defects that could affect his or her decision.
- 3. Assessment of Market Value and Modification of Conditions
Understanding the market value of a property is essential. Comparative market analysis, carried out by professionals, helps to establish a fair price based on current data. In addition, any changes to the price or conditions of sale must be clearly defined and accepted by all parties involved.
- 4. Legal warranty exclusions
The possibility of excluding the legal warranty should be approached with caution. In some cases, such as a finance takeover, it may be appropriate to sell a good without a quality warranty, but this must be clearly stated in the contract to avoid any confusion. Total exclusion of the warranty may influence the sale price and the remedies available to the buyer in the event of undisclosed defects.
- 5. Tips for brokers
Brokers have a duty to clearly inform and advise their customers on the implications of legal warranties and their exclusions. They must also ensure that any changes to the conditions of sale are fully understood and documented to protect the interests of all parties.
Conclusion:
Legal warranties are a fundamental aspect of real estate transactions in Quebec. Understanding these guarantees allows buyers and sellers to navigate more serenely through the buying and selling process. The OACIQ plays a crucial role in providing guidelines and ensuring that brokers respect ethical and legal standards for the benefit of all.
This article aims to educate and inform on legal guarantees in real estate, emphasizing the importance of proper representation and advice throughout the transaction.
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