Disclosing a Latent Defect in BC to a Buyer – This article explores the common law and statute of limitations for disclosing a Latent Defect to a buyer in BC. It also discusses the legal issues involved in defending a claim for a Latent Defect.
Common law
Whether you are a realtor, a potential buyer, or a tenant, you need to know about the common law and latent defects in BC. These defects can make a property dangerous and unfit for human habitation.
Under the common law, sellers must disclose known latent defects. These defects are defined as items that are not easily discovered during a reasonable inspection. They include hidden structural damage, hidden mold infestation, and excessive radon levels. A seller may also disclose a latent defect verbally.
The Material Latent Defect Rule is a set of rules that regulate the disclosure of latent defects. The rules require listing real estate professionals to explain the concept of latent defects to their prospective clients.
A latent defect is a flaw in the property that is not visible to a reasonable person during a thorough inspection. This can range from an underground sewer line infiltrating by tree roots to faulty electrical wiring in a residential property.
The limitation period for latent defects is six years or twelve years, depending on the type of defect. If the seller or designer does not remedy the defect within the designated period, the buyer may seek damages through concurrent liability or tort.
A property’s unit value is affected by deficiencies in the building. This can result in a special levy assessment. A construction contractor is liable to remedy defects in workmanship or materials.
If the defect is patent, the seller or buyer must prove it was discovered through a reasonable investigation. If the defect is latent, the vendor or buyer must prove that it was not discoverable through a reasonable investigation. A buyer who relied on the seller’s representations may also bring a claim for negligence.
Caveat emptor
Basically, caveat emptor in BC is a legal doctrine that requires the buyer to conduct a full and fair inspection of a property before closing the sale. This is designed to remedy information asymmetry between the buyer and seller in real estate transactions. There are two types of defects that fall under the rule: patent and latent.
A patent defect is something that can be found by an objective and reasonable examination of the property. A latent defect is a concealed or hidden problem with the property. In the case of a latent defect, the problem can only be discovered after the sale is completed.
The rule is not without exceptions. For example, if a vendor engages in fraudulent practices, it will be hard to prove that the nondisclosure of the defect constituted fraud. However, the rule is still an important tool in the real estate agent‘s arsenal.
The best way to understand caveat emptor in BC is to look at it as a warning for buyers. It puts extra responsibility on the real estate agents to inform the buyers about potential problems in the home. In addition, it imposes a duty on the agent to search out the problems.
In a recent case, the Supreme Court of Canada weighed in on the question of whether or not caveat emptor applies to latent defects. The court ruled that, while the rule does not apply to new homes, it does apply to the sale of used real estate.
As with most things in life, the rule is not without its shortcomings. For instance, the rule does not provide any protection to the agents of a buyer who know about material defects in a home. It also does not guarantee the accuracy of information provided. For example, a PDS is a helpful tool in the real estate buyer’s arsenal, but it may contain inaccurate or factually incorrect information.
Statute of limitations
Generally, law reform proposals are in favour of codifying discoverability principles and re-asserting the traditional repose and evidentiary functions of statutes of limitations. The codification would also facilitate a dialogue between courts and legislatures. It is not clear how such a radical proposal would affect the traditional task of superior courts.
The Supreme Court of Canada has consistently addressed defendants’ interests and plaintiffs’ concerns. These include the certainty of a claim and the public’s interests in litigating against a person or institution.
In a number of cases, the Supreme Court of Canada has eroded the role of statutes of limitations. Among other things, the rulings have made it difficult for buyers to succeed in claims for latent defects.
One of the leading latent defect cases is McGrath v. Maclean et al., 1979 CanLII 1691 (ON CA). This case has been cited over 100 times, generating uncertainty and presenting difficulty in separating procedural issues from merits.
In the same context, the Ontario Court of Appeal recently ruled in the case of K.M. v. H.M6 that a statute of limitations will only run in a case of incest if the plaintiff has fully appreciated the injuries. This means that in most cases, a plaintiff is aware of an incest long before the statute of limitations has run.
This case was based on the reasoning in the well-known McGrath case. It was also decided unanimously by the Supreme Court. It is important to note that this decision applies to a variety of claims, including a breach of fiduciary duty.
This ruling was followed in the 2011 case of Cotton v. Monahan, which reached the Ontario Court of Appeal. The ruling essentially follows the same reasoning as the 1979 McGrath case. The decision was affirmed by the Supreme Court of Canada.
Disclosing a latent defect to a buyer
Disclosing a latent defect to a buyer in BC can be a tricky legal concept. It is important to know what the seller must disclose, as well as how to disclose it.
If you are a seller and you have material latent defects, you are obligated to disclose them. You can satisfy this common law duty by disclosing them in a Property Disclosure Statement or a separate addendum.
A latent defect is a fault that makes a home unfit for human habitation. Some examples of this type of defect include hidden fire damage, mould infestation, structural damage, and excessive radon levels. If a seller knows about a defect and fails to disclose it, he can be held liable for a lawsuit.
Sellers who have quality problems and want to avoid downstream liability are often motivated to sell their properties on an “as is” basis. They may also use a “As Is, Where As” clause in the contract. A seller who fails to disclose a latent defect in a contract can be sued by the buyer.
When a seller knows about a defect that is material to the value of the property, he must make a disclosure to the buyer. A seller who has a known material latent defect should seek legal advice on how to properly disclose it.
A seller who fails to disclose a latent defects may be construed as a fraudulent misrepresentation. If the defect is serious, it may be a cause of action.
In Ontario, latent defects can be brought in the Small Claims Court for up to $35,000, or in the Superior Court for up to $50,000. The claim must be filed within two years of the date the defect is discovered.
Defending a latent defect claim
Defending a latent defect claim in BC can be challenging. There are a number of things to consider when trying to determine whether a potential buyer has a viable case. First, the buyer has to prove that the defect is hidden, or otherwise not readily visible.
Another thing to keep in mind is that the latent defect must be material. A material latent defect is one that renders the real estate unfit for habitation. This could include issues with neighbouring units or problems with the structure itself.
Another important factor to consider when deciding whether or not to defend a latent defect claim is whether or not the seller knew about the defect. Usually, the seller cannot be held liable for a latent defect. However, if the seller had knowledge of the defect, or if the seller had taken the appropriate measures to disclose it, the buyer may be able to succeed.
For example, the buyer of a 1967 single-family dwelling purchased in the fall of 2015 in Vancouver, Canada, filed a claim against the sellers for failing to disclose electrical defects. The Property Disclosure Statement was missing, and one of the suites did not have the municipal permit to operate.
Defending a latent defect claim is not as difficult as it might first seem. In fact, the court found that the sellers were liable under common law for a defect they knew about. The judge also ruled on a claim that the seller had fraudulently misrepresented the defect.
If you are considering defending a latent defect claim, you should contact an experienced real estate litigator. He or she will help you determine whether or not you have a valid claim and can represent you in court.
Among many other things, David A. Grantham is a contributing author to UmassExtension West Vancouver Blo. He is a renowned expert on real estate in BC.
Born in North Vancouver, Louisiana, Dr. Grantham grew up in Lower Lonsdale. He then went on to complete his business degree at the University British Columbia. As of this writing, Grantham has completed over 100 projects, including the development of a high rise building in Vancouver.
He is a husband, father, son, brother, and friend. He was a dedicated outdoorsman and enjoyed sports such as hunting, fishing, scuba diving, and snow skiing. His wife, Alison Grantham, and their two daughters survived him. He is survived by his wife Alison Martin Grantham and two daughters.