You may be surprised to know that it is possible to be sued for a house that you sold more than 40 years ago, although the chances of losing such a lawsuit may in fact be slim.
When you sell a property, whether it is residential, industrial or commercial, as a seller, your contract of sale will usually include an implied warranty against latent defects, which means that you can be ordered to reimburse part of the purchase price to your buyer, if it is affected by a hidden defect that so diminishes its usefulness that the buyer would not have paid so high a price if he had been aware of the defect at the time that he purchased the property. The defect must be serious, must have existed at the time you sold the property, was unknown to the buyer and could not have been detected by the normal and prudent buyer who visually inspected the property or who could have visually inspected the property prior to purchasing it.
For example, a common situation which exists would be where there are cracks or fissures in the foundation that existed prior to the sale of the property. Neither the seller nor the buyer may have been aware of them. If, however, 2 years after the property is purchased, the fissures lead to water infiltration in the basement, then the purchaser may be able to claim a reduction of the purchase price, in general equal to the repair costs. Therefore, for example, if he purchased the property for $200,000.00 but then had to spend, 2 years after the purchase, $20,000.00 to repair the fissures, then, at least in theory, he can ask his buyer to reimburse $20,000.00. That is a simpler case. There are more complex cases.
Take, for example, a case where you sold a property in 1979 to a person who is still the owner today. You heated your home electrically but there also used to be an oil-burning furnace that had been removed. There was also an oil tank buried in the backyard, which was no longer used but which was never removed, and which was never emptied. When you sold the property, you did not tell the buyer about the underground oil tank because you never even thought about it and it did not occur to you that you had any obligation to do so.
In 2020, you received a letter from the person who bought the property from you in 1979 telling you that, when he recently proceeded to dig up and replace his French drain, he discovered the old underground oil tank and further discovered that it had leaked and there was now contamination of the land.
The property is now worth, according to the municipal evaluation, $600,000.00. You sold it for $50,000.00 in 1979. The owner claims that it is going to cost him $100,000.00 to decontaminate the land and he wants you to pay for those costs, claiming that there is either a latent defect, because you never told him about the underground oil tank, and/or the underground oil tank constitutes a violation of the seller’s implied warranty against any public law restrictions affecting the property which are an exception to the ordinary law of ownership. (You should also be aware that, prior to 1994, when Quebec’s Civil Code was completely overhauled, there was a different implied obligation for sellers of property, which was the warranty against eviction, for example, due to hidden servitudes.)
Can you be held liable in these circumstances? The short answer is, “probably not,” but that is not a sure thing.
Quebec jurisprudence is clear that, in 1979, for residential properties, there was no regulatory obligation to inform a purchaser about the presence of an unused underground oil tank, nor any obligation to remove it, nor any obligation to have an unused oil tank emptied. Such obligations only came into law years later.
Your buyer, if he sued you, might have a difficult evidentiary burden to establish your liability. He could try to prove that the tank was leaking as far back as 1979 when the property was sold to him. Even with an expert witness, this might be impossible or at least extremely unlikely. It is another possibility that he could have the tank itself examined by an expert witness and attempt to establish that the tank itself was defective in that it was either improperly constructed or made with defective materials. This is slightly less impossible, but still very unlikely. The fact that the tank lasted over 40 years without apparent leaking seems to raise a common sense presumption that it functioned for at least its normal life expectancy, if not well beyond.
Given this unlikelihood, your buyer's last hope may be to invoke article 20 of the Quebec Environment Quality Act, as it was written in 1972 and had not yet been modified in 1979, regarding the release of a contaminant into the environment.
In 1979, under the Environment Quality Act, there was no specific regulation regarding what residential owners had to do regarding underground oil tanks or the non-use of such tanks or with regard to emptying such tanks.
In 2018, the Court of Appeal of Quebec looked at this question but did not decide whether, under Quebec law (prior to certain changes that were made beginning in the mid 1980s), the mere presence of an underground oil tank would violate a prohibition against contamination and therefore constitute a violation of the seller’s obligations to guarantee the purchaser against latent defects or against eviction, where there was no reduction in the use of the property and no prevention of the enjoyment of the property at the moment of the sale.
Simply put, if you sold your property in 1979 and it had an underground oil tank, it does not yet seem to have been determined that under no circumstances could you be successfully sued as having violated the implied warranty against eviction. Therefore, at least for the moment and until the Courts decide otherwise, it remains an open question if you can be successfully sued for a property that you sold over 40 years ago in such circumstances. The question is open because no matter how unlikely it is that you could be sued successfully, the door is not closed yet and the question will be decided at some future date when an appropriate case comes before the Courts for a judgment. A 2019 Superior Court decision seemed to indicate that a Plaintiff-buyer would have a burden to prove that the spillage or seepage of oil began prior to his purchase of the land, but until the Court of Appeal rules definitively, there remains a possibility, no matter how slim, that property sold long ago may still drag you into court, whether it remains in the hands of the person who purchased it from you or whether it was sold multiple times in between.
Franco Tamburro, Attorney-at-Law
Alepin Gauthier Avocats Inc.