Buying a house with “no statutory warranty”: good idea or a ticking time bomb?

Buying a House “Without Legal Warranty”: A Good Idea or a Time Bomb?

In almost all promissory purchase agreements in Quebec, there is a key clause, sometimes reassuring… sometimes worrying:

“The property is sold without legal warranty, at the buyer’s risk and peril.”

For some, it’s a chance to strike a good deal. For others, it’s a red flag.

Before signing, you must understand what you are buying… and what you are losing.

1. What is the “legal warranty”?

In Quebec law, the legal warranty mainly includes two components:

1. Property warranty

• The seller guarantees that they are the owner of the property sold.
• They guarantee that the property is free of unknown rights (hidden mortgages, undeclared easements, etc.).

1. Quality warranty (hidden defects)

• The seller guarantees that the building is free of hidden defects:
• Serious defects
• Past to the sale
• Unknown to the buyer
• That make the property unfit for use or so diminish its usefulness that you would not have bought it or not at the same price.

By default, even if it isn’t written in the contract, this warranty applies.

Except when… it is excluded.

2. What does “without legal warranty, at the buyer’s risk and peril” mean?

When you buy without legal warranty, you waive (in whole or in part) these protections.

In practice, it usually means:

• You take the house as is, with its qualities and its defects, visible or not.
• You agree to not sue the seller for hidden defects (except for important exceptions, see below).
• You assume that future repairs will be your responsibility, even if the problem existed before the sale.

This clause is very common in:

• Sales of inheritance (heirs who don’t know the property well)
• Sales by elderly people who are moving to a CHSLD or a residence
• Sales by flippers or investors
• Sales of houses requiring major renovations

3. Can you really exclude everything? The limits of the clause

Even if the contract says “without legal warranty,” the seller cannot protect against everything.

3.1. Fraud and bad faith remain prohibited

The seller CANNOT:

• lie or deliberately conceal an important information
• Mislead you about a problem they know about

Examples :

• They know there has been a recurring water damage in the basement and have simply repainted without declaring the problem.
• They know about the presence of pyrite, contamination (oil, abnormally high radon, major mold) and do not mention it.

Even with a “without legal warranty” sale, a seller acting in bad faith can be sued.

3.2. The warranty of hidden property cannot be excluded

If you discover after the purchase:

• An unrecorded mortgage
• An important un disclosed easement (for example, a major right of way that affects use)
• A serious property dispute

You could still have remedies, even in the absence of a quality warranty.

4. Why do some sellers insist on “without legal warranty”?

4.1. They don’t know the property well

Classic example: an inheritance.

The heirs :

• Have never lived in the house
• Do not know what happened over the years
• Don’t want to be held responsible for issues they’re unaware of

4.2. The property is old or “sold for the land”

• Very aged house, with a multitude of repairs to do
• Main value is in the land, not the building
• The seller wants the buyer to assume fully the current condition

4.3. Strategic and financial aspect

• Reduce the risk of future lawsuits
• Attract a certain type of buyer: investor, handyman, contractor

5. What are the risks for the buyer?

Buying without a legal warranty means accepting a higher level of risk.

Practically, that can mean :

• Discovering costly problems after purchase, with no easy recourse :
• Cracked or unstable foundation
• Chronic water infiltration
• Roof nearing end of life
• Electrical installation dangerous
• Contamination (oil, pyrite, etc.)
• Enduring alone :
• Cost of corrections
• Stress
• Project delays

6. In what cases can buying without a legal warranty still be logical?

6.1. You pay a price aligned with the risk

Agreeing to a sale without a legal warranty should almost always be accompanied by a price reduction compared to the market.

You accept :

• More unknowns
• More risks
• More potential work

In exchange, you should demand :

• A lower price
• A margin to absorb surprises

6.2. You’re willing to renovate

It makes more sense if :

• You had already planned to redo plumbing, electrical, kitchen, bathroom, etc.
• You are considering a major renovation or reconstruction
• You have a (10 to 20% of the house price for unforeseen costs)

6.3. You are well supported

• A competent building inspector (ideally recommended, with good reputation)
• A real estate broker who truly explains the implications
• A legal advisor / notary if needed to review the clauses

7. Clauses to watch for in the promissory purchase

When you see “without legal warranty,” read carefully what follows.

There are often variants :

1. Without quality legal warranty, but with property warranty

• More common
• You waive recourse for hidden defects, but keep certain protections on the title of ownership.

1. Without any legal warranty

• More severe
• Includes quality AND potentially some aspects of ownership
• To be analyzed by a professional before accepting.

1. Different formulations :

• “At the buyer’s risk and peril”
• “The buyer handles the issue personally of …”

These words matter: they determine the real scope of your waiver.

8. How to protect yourself before buying without a warranty?

8.1. Pre-purchase inspection: non-negotiable

More than ever, you must :

• Do a comprehensive inspection by a qualified professional
• Ask targeted questions :
• Signs of water infiltration?
• Structure and foundations?
• Roof condition?
• Land slope and drainage?
• Electrical and plumbing?

Read the full inspection report, not just the conclusion.

8.2. Ask for the seller’s declaration

Even in an inheritance, there are often informations:

• Work done
• Previous claims
• Major repairs
• Known problems (e.g., old infiltration, French drain replaced, etc.)

8.3. Plan for an unforeseen budget

In practice :

• Set aside a cushion for surprises (often 10–20% of the purchase price or renovation budget).
• Do not tie up all your cash liquidity as a down payment.

8.4. Assess your risk tolerance

Ask yourself frankly :

• If I discover a major problem of $20,000–$40,000?
• Can I pay for it?
• Can I mentally handle it?

If the answer is “no,” buying without a legal warranty may not be for you.

9. Should you always avoid a sale without a legal warranty?

No. It isn’t automatically a bad deal, but it is never a decision to take lightly.

It’s like buying a used car:

• With warranty: you often pay more, but you sleep better.
• Without warranty: you pay less, but you take the risk of a major problem.

For some buyer profiles (investors, entrepreneurs, seasoned DIYers), the risk is acceptable, even desirable.

For a young couple with a tight budget buying their first home, it can be dangerous.

10. Conclusion: how to decide?

Before buying a house “without a legal warranty,” make sure you:

1. Understand exactly what you are signing.
2. Have done a serious inspection.
3. Have obtained a realistic price reduction to compensate for the risk.
4. Have a financial cushion for surprises.
5. Are comfortable, emotionally and financially, with the idea of bearing the problems alone.

A house without a legal warranty can be:

• An excellent strategic purchase, if you know what you’re getting into
• Or an expensive nightmare, if you sign without understanding the implications

The key is not to be blinded by a crush or by the fear of “missing your chance.”

Before giving up the legal warranty, take time to do your homework, consult your professionals… and respect your own limits.