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The Disclosure Obligations of a Seller: Patent vs. Latent Defects

By sedoo

In Ontario, the disclosure obligations of a seller do not extend to all existing defects in a property. For the purposes of disclosure requirements, there is a distinction made between “patent defects”, and “latent defects”.

Patent defects are those defects which are discoverable by the buyer, or the buyer’s inspector during a professional home inspection. Examples of such defects include a crack in the wall; or missing fixtures. The onus is on the buyer to be diligent, as the seller is under no duty or obligation to disclose such defects. Notwithstanding this, the seller is not permitted to hide or conceal patent defects so as to prevent their discovery by the buyer or their inspector. Such action may cause the seller to be held liable by the buyer down the line.

The onus is reversed in the case of latent defects. Latent defects cannot easily be discovered by a buyer, or their home inspector. Examples of such defects include a problem with the foundation of the property, or electrical damage. Where a seller is aware of any existing latent defects in a property, they are under an obligation to disclose such defects to the buyer. The exception to this is latent defects which are not known to the seller. The seller cannot be held liable for not disclosing defects of which they had no knowledge.

The main takeaway of this is as follows: buyers must be very diligent when it comes to home inspections. It would not be prudent to waive the right to complete an inspection of the property in order to have a more competitive offer. Inspections should be completed diligently, and a qualified home inspector should be sought out for this purpose. Buyers should be on the lookout for patent defects so that these can be addressed clearly in the Agreement of Purchase and Sale prior to the purchase offer becoming firm. Likewise, any latent defects disclosed by the seller should also be thoroughly investigated by a qualified professional in order to allow the buyer to make an informed decision.

 

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Reem Haroon is an Associate Lawyer at Kormans LLP. Her practice areas include Real Estate Law, Corporate Law and Wills/Estates Law. You can reach Reem at rharoon@kormans.ca.

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