Hidden problems with how homes have been built or renovated account for growing number of court casesSPECIAL TO THE GAZETTE
The
When Frederic Hore bought himself a small bungalow in Dorval ,
he knew there were a few things to fix up. But Hore didn’t mind. He had
previously built his own house and was savvy enough with his hands to be hired
in the CBC’s engineering department to supervise the tradespeople.
He inspected the house himself before he bought it in 1994
and thought he knew what to look for. In fact, even a trained house inspector
wouldn’t have caught most of the problems that arose over the next years, he
said.
That’s because they were what is known as hidden or latent
defects—problems hidden behind walls or under floors that are difficult or
impossible for an inspector to see.
“The problems only started after I moved in and the snow
melted,” said Hore, 55.
One of the first things he noticed was the sagging floor in
the bathroom.
“I thought, ‘This was strange,’” he said.
The reason for the sagging, he discovered, was someone had
cut away two-thirds of the supporting joists that held up the floor from
underneath.
Hore said he also found six layers of shingles on the
roof—well over the limit allowed in the building code. The excess layers were
too heavy for the roof to bear and had caused the shingles to curl, Hore said.
Other repairs included overloaded electrical circuits, a
lack of insulation and rotting drywall. He estimated the total bill at
$13,000—a sum Hore said would have been far higher if he hadn’t done most of
the work himself.
Just as bad, he said, is it’s taken him 13 years to make
all the fixes.
Hore is one of a growing number of homeowners finding
themselves with hidden defects often costing tens of thousands of dollars. It’s
the dark side of the real-estate boom.
“There are more and more cases,” said Michel Rocheleau, a Montreal real-estate
lawyer for whom hidden defects make up 75 per cent of his practice.
“It’s without end. I start a new case practically every
week.”
Jean-Pierre Deguire, a lawyer at the Boucherville firm Lecompte
Deguire who acts as a court-appointed mediator in the small-claims division at
the Quebec Court, is also seeing more cases. The reasons: a booming number of
real-estate transactions and the fact that, in 2003, Quebec raised the
maximum limit for small-claims cases to $7,000 from $3,000.
This caused many hidden-defects claimants to turn to
small-claims court with their cases because, there, clients don’t need lawyers.
Deguire said hidden-defects cases today make up 60 percent
of the small-claims cases he receives for mediation.
Another reason for more cases, according to Rocheleau: more
shoddily built houses. Urban sprawl has pushed real-estate development onto
land less suited for housing, he said, while corner-cutting developers have
left some homeowners to deal with defects that become apparent only 10 or 15
years later.
The cases can involve massive sums. The biggest sources of
defects are foundations (responsible for 75 per cent of Rocheleau’s cases) and
roofs (making up another 15 per cent), with the average bill ranging from
$30,000 to $60,000.
And that’s not including the cost of presenting the claim
itself, which, Rocheleau said, averages $5,000 to $10,000 for legal bills and
another $5,000 to $7,000 for hiring experts, like engineers and contractors, to
testify.
The astronomical costs are a big reason Rocheleau advises
clients to try to settle out of court if possible. He said half his cases are
resolved that way.
Many claimants also voluntarily reduce the amount they seek
in order to qualify for small-claims court so as to avoid the cost of hiring a
lawyer.
Even then, however, expert witnesses can still cost
hundreds of dollars. There might also still be some legal costs to bear.
Rocheleau advises claimants and defendants alike to meet a lawyer for an hour
or two before the case in order to prepare and make sure they understand the
rules of evidence.
The reason: many home buyers and sellers are unaware of
their rights and responsibilities when it comes to hidden defects, Rocheleau
and Deguire both said.
The biggest mistake sellers make, Deguire said, is thinking
that because they didn’t know about a hidden defect, they aren’t responsible
for it.
Rocheleau said he sees this mistaken reasoning all the
time.
“People often take it as a criminal allegation or a sign of
dishonesty, but the defect can often be unapparent for years,” he said.
On the other hand, if a vendor did know about the problem
and didn’t tell the buyer, the buyer can sue not only for the cost of repairs
but also damages under the Quebec Civil Code.
For home buyers, the biggest mistake is not having an
inspector or other qualified expert check out the house before signing a deal,
Rocheleau said.
“Many people are imprudent,” he said. “They often buy
because they fell in love (with the house), and there’s not much that can stop
them.”
Buyers who believe they’ve discovered a hidden defect must
be able to show the problem couldn’t have been reasonably found during a
pre-purchase visit to the house.
For example, if a potential problem area is obscured by
material like boxes, the buyer or their inspector is obliged to move the items
or ask the buyer to do so, Rocheleau said.
That’s what one house buyer wishes her inspector had done
when she bought a three-bedroom house in Châteauguay in 1999.
Boxes in the basement had concealed a poorly installed
electrical box with exposed wires. The buyer only discovered the dangerous
wires when she called in an electrician to figure out why her circuits kept
blowing.
He found not only the exposed wires but also a highly
overloaded fuse box.
“You should have seen the look on the electrician’s face.
It was total shock,” said the homeowner, a nurse and writer who didn’t want her
name used because she wants to put the problems in the past.
The previous owner had done the electrical wiring himself.
The entire house had to be rewired at a cost of $4,000, she said.
The new owner said she didn’t try to pursue the previous
owner because he had left the country and it didn’t seem worth the trouble to
her family.
As for Hore, he didn’t go after the vendors of his house
either; they had also left the country.
“It’s almost like that movie The Money Pit with Tom Hanks
and Shelley Long,” Hore said, “only I have not fallen through the stairs—yet!”
Say you just bought a home and discovered a leaky
foundation or shoddy roof. What do you do?
Legal experts say buyers must follow some specific steps in
order to recover the cost of repairs from the previous owner:
First, inform the seller of the defect as soon as possible after discovering it.
This can be done verbally.
If you’re not satisfied with the seller’s response, you must send a registered
letter outlining the claim, including an estimate of the repair cost. The
seller should be given 10 to 60 days to respond, depending on the urgency and
gravity of the case. Sellers have the right to get their own estimate and have
the defect repaired at their own cost by their own contractor.
If there’s still no amicable settlement, you can do the repairs yourself and
file a court claim to recover the costs—as well as for damages if you think you
can prove the seller knew about the defect. Cases of $7,000 or less are filed
with the small-claims division of the Quebec Court, from $7,001 to $70,000 with
the Quebec Court’s civil division and above $70,000 with Superior Court.
In a bona fide case, the judge usually awards nearly the entire cost of repairs
to the buyer, albeit depreciated in accordance with the age of the house. The
seller is also usually ordered to pay the buyer’s court costs, but the amounts
were set back in 1971 and often account for only 10 to 15 percent of actual
legal costs.
