I’m thinking about buying a house and I’m worried about defects. How do I ensure I don’t buy a property with serious defects? (Part Two – latent defects)
In last week’s column, I briefly touched on the distinction between patent and latent defects in a home and when they should be disclosed, with the proviso that buyers and sellers alike should seek the advice of a real estate lawyer on the subject. The purpose of this column is to provide general information in order to help buyers and sellers understand their rights and responsibilities in a real estate transaction, not give specific legal advice about latent defects.
To recap: a patent defect is a problem with a home that is easily observable, such as a broken window, a missing door, or a visibly leaking basement. Sellers are not required to disclose patent defects to potential buyers, so it’s the responsibility of the buyer to find them. That’s why I encourage buyers to hire an experienced home inspector or specialized inspector, if the need arises, and to make any offers conditional upon the successful completion of a home inspection.
Still, home inspections have their limitations. Unlike patent defects, latent defects are not readily observable, and might not be discoverable during a reasonable examination of the property, even by an experienced inspector or other expert. (Keep in mind that a typical home inspection is a visual assessment of a property’s condition, and it doesn’t involve removing floorboards or drilling holes in the walls to inspect spaces that are hidden from view). Examples of latent defects might include major problems with the home’s foundation that are not visible, wooden support beams that are rotten, or a pipe that leaks water behind the drywall.
Sellers must disclose latent defects that they know about, and that could make a home dangerous or unfit for habitation to potential buyers. Sellers also cannot actively conceal a latent defect that renders the property dangerous or uninhabitable. If a seller does not disclose a latent defect, they put themselves at risk of being subject of a lawsuit from the buyer.
When you’re ready to buy a home, I strongly recommend working with a registered real estate salesperson or broker who can help you create a list of questions to ask the seller’s representative.
The Real Estate Council of Ontario doesn’t regulate the actions of buyers or sellers, but our Code of Ethics forbids real estate salespeople from knowingly making any inaccurate representations about a property. They must also take reasonable steps to determine and disclose to their own client all facts about a property that might affect a buyer’s decision to purchase. Remember to always exercise your own due diligence before you make an offer. Again, as a seller, it’s particularly important to understand what you must disclose to a prospective buyer; a real estate lawyer can help if there is any uncertainty.
If you have a question for Joe about the home buying or selling process, please email firstname.lastname@example.org.
Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO). He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at http://www.youtube.com/RECOhelps.