2018-04-26 10:55:53 Running a Business English Learn what a latent defect is, how it differs from a patent defect, which party in a transaction has a duty of disclosing latent or patent... https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2018/04/Man-Explaining-Latent-Defect-Listener.jpg https://quickbooks.intuit.com/ca/resources/business/latent-defect-definition-explanation/ What Is a Latent Defect?

What Is a Latent Defect?

1 min read

A latent defect is a flaw in property you can’t easily spot with a superficial inspection and that the seller does not know exists. This is in contrast to a patent defect, which is a flaw that is fairly obvious that you can usually spot pretty easily. For example, if you are shopping for a house and notice a large crack in the wall or a door with a hole, these are examples of patent defects because you can spot them so easily. Latent defects could be rooms painted with lead-based paint, for example, or a mould problem under the carpeting. These defects are not easily discoverable in the absence of an inspection and it is possible that the seller doesn’t know about them.

Canadian case law takes different positions on the seller’s duty to disclose defects to the buyer, depending on whether the defect is a patent defect or a latent defect. The law generally takes a “caveat emptor,” or "buyer beware" approach to patent defects. If you are the buyer of a property with a patent defect that you could have discovered by performing a basic home inspection or walk-through, then you’re liable for the cost of correcting the flaw. The seller has no obligation to tell you of a patent defect you should have discovered with due diligence, regardless of whether the seller is aware of it or not.

Regarding latent defects, the seller only has the duty to tell you of a latent defect of which he or she is aware. If the seller has no knowledge of the defect, you’re stuck absorbing the cost of correcting it. If the seller is aware of a latent defect, especially one that has the potential for harm, such as mould or lead paint, then the courts impose a duty for the seller to disclose the defect to you.

A seller is also liable for making misrepresentations to you about the property. If you ask the seller about any plumbing or electrical problems and the seller denies knowing of any but you can prove otherwise, the seller is liable for correcting the defect. The same goes for a seller who attempts to conceal a defect. Under the law, silence and half-truths can also amount to material to misrepresentations.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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