Latent Defects in Residential Property

Latent Defects in BC

Latent Defects in residential property are items that are not easily discovered during a reasonable inspection. This differs from patent defects, which are visible and obvious. If the seller knew about these items before selling the property, it is his or her responsibility to disclose them to the buyer. In many cases, sellers are required to disclose such items.

Caveat Emptor

Caveat emptor is a Latin phrase which means “buyer beware.” In the Province of British Columbia, caveat emptor applies to property sales, which means that the purchaser has the responsibility to determine the quality of the property. If there are latent defects in a property, the vendor has a duty to disclose these defects to the buyer.

Caveat emptor is especially relevant when serious property defects are present. Unless a seller discloses these defects to the buyer, a buyer will only succeed in a breach of contract claim. For example, if a property has unpermitted suites or is used as a marijuana grow-op, the seller must disclose the condition.

In its recent decision, the B.C. Court of Appeal addressed caveat emptor, the principle of buyer beware. The court ruled that caveat emptor applies in real estate transactions in BC, with certain exceptions such as fraud or non-innocent misrepresentation. Caveat emptor also applies to newly-constructed homes. Caveat emptor also applies to the property disclosure statement.

Materiality

Latent defects in residential property are not always obvious, but they must still be disclosed by sellers. In fact, a seller must disclose these issues to the buyer during the pre-listing due diligence process. This way, they can avoid legal action later. Here are some examples of latent defects in residential property.

A material latent defect is a hidden major defect in a home. A seller cannot conceal it from a potential buyer, and any attempt to do so will be considered fraudulent misrepresentation. Examples of material defects include expensive repairs and unsafe living conditions. Moreover, the seller must disclose any warnings or notices about the need for repairs, which can also constitute a material defect.

A seller is required by law to disclose any Material Latent Defects. Failure to do so could jeopardize a property’s sale. A buyer may learn about these defects during the inspection or review of real property reports and permits. Further, if the seller makes a warranty statement that there are no known Material Latent Defects, a buyer may seek legal action against the seller.

Discretion

Discretion and latent defects in British Columbia real estate laws are closely related to one another. Both are required to be disclosed by sellers. Latent defects are those that are not discovered during a reasonable inspection. The listing REALTOR is responsible for doing pre-listing due diligence to make sure that the listing discloses any material latent defects.

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