Depreciation in respect of latent defects: an aspect not to be overlooked

In this video (FR), Mtre Bryan Eric Lane discusses the concept of depreciation as it applies to claims for latent defects.

As noted in an earlier post, published on Éditions Yvon Blais’ blog on latent defects on November 10, 2016 (FR), the legal warranty of quality is not a replacement cost warranty. Thus, in the context of a claim for latent defects seeking the cost of replacement/repair of a component of a building that has stood for many years but has not yet reached the end of its useful life, determining the applicable depreciation is essential in order to take into account the added value that the replacement/repair of the defective component will bring to the building, so as to avoid enriching the buyer at the expense of the seller.

Mtre Lane also discusses the importance of determining the applicable depreciation from the outset, even as a claimant, in order to determine the current economic value of the claim that a buyer can assert against the seller under the legal warranty of quality. Claiming a realistic amount from the seller under the legal warranty from the outset could help the parties to reach a settlement much more quickly.

Moreover, Mtre Lane points out that the property’s age, fair wear and tear and having reached the end of its useful life do not constitute defects covered by the legal warranty of quality, as noted in an earlier post, published on Éditions Yvon Blais’ blog on latent defects on August 12, 2016.