Hidden defect and construction defect: double standards

The Regulation on the guarantee plan for new residential buildings (1) provides that the warranty of a plan must, in particular, cover the repairs of hidden defects (2), defects in design, construction or construction and defects in soil (3) discovered after the reception of a building. However, it should be noted that this regulation only applies in the case of the contractor's failure to comply with his legal or contractual obligations after receiving the building in question. Can you tell what differentiates these two types of defects?

The hidden defect

In the regulation, the concept of hidden defect is defined according to articles 1726 and 2103 of the Civil Code of Quebec (4) (C.C.Q.) which indicate that the hidden defect is what makes the property unsuitable for the use for which it is intended or reduces its usefulness so much that the buyer would not have purchased it.

According to arbitration case law (5), four criteria qualify a hidden defect:

• It must have a certain gravity
• It must precede the sale
• It must be unknown to the buyer
• It must be occult (i.e. not apparent).

All in all, it should be noted that the key factor is the loss of serious use. In such a case, if reported in writing to the contractor and the administrator within a reasonable period of time not exceeding six months from its discovery, the defect will be eligible for warranty coverage for a period of three years, this period beginning from the date of receipt of the building.

Defects in design, construction or construction and floors

The concept of defect in design, construction or construction and floors, for its part, introduces a concept provided for in article 2118 of the Civil Code of Quebec. (6), i.e. the loss of the work.

Note that there is no requirement for the building to collapse to qualify for protection since the concept of loss of the work has a broad interpretation. The presence of a serious danger likely to cause a potential loss, even partial loss of the structure, is sufficient (7). It is the risk of loss and not the occurrence of the loss that results in coverage by the plan. Arbitral case law also tends to consider the possibility of a risk to the health of occupants as an aggravating factor making it possible to provide coverage (8).

Also, as in the case of a hidden defect, the complaint must be made in writing to the contractor and the administrator within a reasonable period of time not exceeding six months from the discovery or occurrence of the defect (or of the first manifestation in the event of gradual loss).

It is important to note the difference between coverage for hidden defects and that for construction defects. Coverage for hidden defects extends over a period of three years following the reception of the building, while that of construction defects extends for a period of five years following the end of the work.

Did you know that?
In the event of dissatisfaction with a decision by the administrator, the beneficiary or the contractor may not only apply to an arbitration court within 30 days of receiving the decision, but may also agree to use mediation to try to reach an agreement on the dispute between them.

François-Olivier Godin is a lawyer at La Garantie Qualité Habitation.

1. RRQ, c B-1.1, r 8
2. Sections 10 (4) and 27 (4) of the New Residential Buildings Guarantee Plan Regulation
3. Sections 10 (5) and 27 (5) of the New Residential Buildings Guarantee Plan Regulation
4. L.Q. 1991, c. 64
5. See in particular Habitations Meaujé and Syndicat Condominium Châtelets phase II, GAMM 073518
6. Supra, note 4
7. Syndicat de la des Habitations Henri-Deslongchamps et Gestion Giovanni Scalia Inc., GAMM 0506-8219
8. SDC Jardins de Grenoble (3 683 432) and 9232-6941 Quebec Inc. (Classic Housing), CCAC S11-120903-NP

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