In Québec, the basic rule is simple: every property is sold with a warranty that exists under the law regarding the validity of the title and the quality of the building. It is under this law that a buyer who has taken possession of a property can sue the seller if he discovers defects that he could not have reasonably known about at the time of the transaction.
However, the parties may agree otherwise. Often, properties are for sale with the indication "without legal warranty". In such cases, the buyer acquires the property at his own risk and waives, in advance, his right to take legal action against the seller in the event of hidden defects. Often, the sellers of such properties are people with only a limited knowledge of the home, such as liquidators of an estate, for example.
In return for the risk assumed by the buyer, the selling price is generally lower than that of a comparable property. Thus, buyers who agree to take an additional risk benefit from a discount in price. So, what risks are buyers exposed to?
In terms of the validity of the title, Québec’s system for the publication of rights is quite reliable and the notary will perform the same verifications regardless of whether the sale is with or without legal warranty. So, at this level, the risk is rather low.
As for construction defects, with or without a legal warranty, the seller is obligated to reveal all of the problems that he knows of. If he fails to do so, he can be sued. However, because in many cases the seller does not actually live in the home, the known defects can be quite limited. The seller has no other responsibilities. Thus, if a defect is found after the purchase, the seller will not be held responsible.
In summary, buying a property without legal warranty can be a bargain, but be sure to properly inspect the home beforehand in order to avoid unpleasant surprises. A real estate broker will be able to advise you in such cases.