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Latent defects in a property refer to any hidden or concealed defects that are not visible during a routine inspection or that are not disclosed by the seller or real estate agent. These defects may include structural issues, such as foundation problems or roof leaks, as well as hidden defects in plumbing, electrical wiring, or other systems within the property.

Latent defects can be particularly problematic for buyers of property, as they may not be apparent until after the sale is complete, at which point the buyer may be responsible for expensive repairs. In some cases, these defects may even render the property uninhabitable or unsuitable for its intended use.

To protect against latent defects, buyers may choose to have a thorough inspection of the property conducted by a professional inspector before purchasing. In some jurisdictions, sellers may also be required to disclose any known defects in the property to potential buyers, although this can vary depending on the laws and regulations in the area.

It is important for both buyers and sellers to understand the potential risks associated with latent defects in a property and to take appropriate steps to protect themselves from financial and legal liabilities.

Types of Latent Defects:

Types of latent defects or hidden damages may include but are not limited to:

Water Damage; Structural Damage; Contaminated Soil; Former Use as Grow- Op; Infestation; Non-compliance with Building Code or By-Laws; Environmental Clean-up; Gas Storage Tank Leakage; Former Use Issues; Dangerous/Hazardous Chemical Use; Seepage Problems; Tree Root Problems; Erosion; Faulty Foundation.

Caveat Emptor or Buyers Beware:

The “buyers be aware” principle, also known as caveat emptor, is a legal doctrine that places the responsibility on the buyer to be aware of any defects or problems with a product or property before making a purchase. In the context of property transactions, this means that buyers are responsible for conducting their due diligence and investigating the property to identify any potential issues.

The principle of “buyers be aware” places the burden on the buyer to protect their own interests and ensures that sellers are not held liable for defects or issues that the buyer should have discovered before making the purchase. However, in some jurisdictions, there are legal requirements for sellers to disclose certain defects or issues that may not be readily apparent during a routine inspection.

Despite the “buyers be aware” principle, buyers still have legal protections and recourse if they are misled or defrauded by a seller. For example, if a seller actively conceals a defect or misrepresents the condition of the property, the buyer may have legal grounds for a claim of fraud or breach of contract.

Overall, the “buyers be aware” principle emphasizes the importance of due diligence and careful investigation by buyers in property transactions and encourages buyers to take proactive steps to protect their interests and avoid costly mistakes.

Exceptions to Caveat Emptor or Buyers Beware:

1. Fraudulent misrepresentation;

2. Knowledge of a latent defect which renders the home uninhabitable;

3. Recklessness as to the truth or falsity of statements relating to fitness of the property for habitation; or

4. Breach of a duty to disclose knowledge of a defect.

What a buyer must know about Latent Defects:

Based on consumer protection interests the courts tend to carve out exceptions to this general principle of buyer beware. By example, although a seller has no obligation to disclose a patent (visible) defect, the seller also cannot attempt to hide or conceal such a defect, this is referred to in law as fraudulent concealment which can lead to a breach of trust and eventually a breach of Contract.

Potential Remedies for the discovery of Latent Defect:

Remedies for latent defects in a property will depend on various factors, such as the jurisdiction, the nature and extent of the defect, and the terms of the sales contract. Here are some possible remedies that may be available to a
buyer who discovers a latent defect in a property:

1. Negotiate repairs or compensation: If the defect is minor, the buyer may be able to negotiate repairs or compensation from the seller to address the issue.

2. Rescind the contract: In some jurisdictions, buyers may have the right to rescind the sales contract and recover their purchase price if the property has a latent defect that was not disclosed by the seller.

3. Sue for damages: If the defect is significant and the seller was aware of it but failed to disclose it, the buyer may be able to sue for damages, such as the cost of repairs, diminution in value of the property, or other costs associated with the defect.

4. Claim under warranty: Some sales contracts may include a warranty or guarantee from the seller that covers certain defects or issues that may arise after the sale. If the property has a latent defect that is covered by the warranty, the buyer may be able to make a claim for repairs or compensation under the warranty.

It is important to note that the remedies available to a buyer will depend on the specific circumstances of each case, and buyers should consult with a qualified legal professional to understand their rights and options in relation to latent defects in a property.

Proving a claim of Latent Defect successfully against the seller:

In order to be successful in a claim against a seller for a latent defect or hidden damage a purchaser must establish:

1. That the seller (or in some cases a sellers real estate agent/broker) made a representation of a fact to the purchaser (or the purchasers agent/broker);

2. That the representation was in fact false;

3. That the seller (agent) made the false representation knowingly or recklessly not knowing whether it was true or false;

4. The seller (agent) intended the purchaser to act on the representation; and

5. The purchaser acted on the false representation, entering into the contract in reliance on it, and suffered losses as a result.

A seller who fails to disclose their knowledge regarding a latent defect or hidden damage on the inquiry of a purchaser risks exposure to a claim by the purchaser if the defect is uncovered after the sale.

Why do you need a Lawyer or a Legal Advisor:

Legal representation is important in claims of latent defects because these cases can be complex, and buyers may need experienced legal professionals to help them navigate the legal system and protect their rights.

There are several reasons why legal representation is important in claims of latent defects:

1. Knowledge of the law: An experienced lawyer can help buyers understand their legal rights and obligations in relation to latent defects, including any applicable laws and regulations that may impact their case.

2. Evidence gathering: To succeed in a claim for latent defects, buyers may need to gather evidence to prove that the seller knew or should have known about the defect and failed to disclose it. A lawyer can help buyers gather evidence and build a strong case to support their claim.

3. Negotiation skills: In some cases, it may be possible to resolve a claim for latent defects through negotiation with the seller or their representatives. A lawyer can provide buyers with valuable negotiation skills and strategies to help them achieve the best possible outcome.

4. Court representation: If a claim for latent defects cannot be resolved through negotiation, buyers may need to pursue legal action in court. An experienced lawyer can represent buyers in court, present evidence and arguments in support of their case, and advocate for their interests before a judge or jury.

5. Overall, legal representation can be critical in claims of latent defects, helping buyers to protect their interests and achieve a fair and just resolution to their case.

How can we help you?

Due to our extensive experience in Civil Litigation, we can precisely present your case before all forums. We can successfully negotiate for you, mediate for you and if required aggressively and zealously fight for you in the court.
Our legal professionals exactly understand your needs and give their best to help you reach the justice you deserve!

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Minhas Lawyers Professional Corporation is a multi-practice law firm based in Mississauga. We advise and represent clients across various segments and practice areas.

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