Material Latent Defects and Real Estate


“We just took possession today and found a serious defect that the Sellers didn’t disclose. What can we do?” An unfortunate fact of life is sometimes we run into Sellers that feel they can hide defects before listing the property for sale. How they somehow feel the defects won’t eventually be discovered by the Buyers is beyond comprehension.


The best way to deal with existing and/or anticipated potential problems is during the drafting of the Purchase Contract.


First, ensure that you have a Buyer Brokerage Agreement signed by your REALTOR® and you. That Agreement makes the Buyer a “Client” of that REALTOR®. Along with that relationship are legal obligations placed upon the REALTOR® that are fiduciary in nature. What that means is your REALTOR® must act in your best interests and place your interests ahead of his/hers. That also makes your REALTOR® your consultant and more than just a salesperson in that a higher duty of care is placed upon your REALTOR® than there would be if you were simply a "customer".


Secondly, when drafting your Offer to Purchase, your REALTOR® will ensure there is a Property Inspection Condition inserted into the contract to protect you. A house inspection performed by a licensed, qualified and experienced property inspector can and does point out most issues relative to the mechanical, structural and services of the building. By “most issues” I mean there may be hidden defects such as inadequate insulation in the walls that can only be discovered if the drywall were removed. The inspector will also ensure appliances, electronic garage door openers, and so on are operating properly and will note any issues there as well.


Thirdly, the Seller is required by law to disclose any “Material Latent Defects” which are hidden defects that cannot be discovered by a typical inspection of the property. Material latent defects could be such things as large cracks in a foundation wall that leaks water into the home only during heavy rains. These may be covered by a finished wall and impossible to detect. Another could be that the sewer backs up every few years because of tree roots and so on. There is some disagreement among lawyers and among REALTORS® whether remediated grow ops are a material latent defect or not. Until the provincial and/or federal governments introduce legislation with minimum remediation standards, I strongly feel remediated grow ops are a material latent defect because of the potential dangers they impose. Conversely, if a defect can or should be found by a reasonable inspection of a property then these types of defects do not need to be disclosed by Sellers.


If the Seller deliberately withholds information with respect to material latent defects, the Buyers recourse would be the courts but be sure to set aside plenty of time and money for legal fees, meetings with your lawyer, discoveries and court appearances. 


Contact us today to ensure in your next purchase you are protected, new or resale there are provisions that essential to ensuring your next transaction is hassle-free.


Viani Real Estate Group

  

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