Latent Defects in Real Estate

Latent Defects

October 9, 2018

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In Real Estate, latent defects are defined according to four criteria:

– The defect must be hidden (“latent” means “not apparent”), i.e., not visible upon close inspection.
– The defect must be serious. This means it must make the building less fit for purpose to such an extent that the buyer would not have bought it or at least would have bought it for a lower price.
– The defect must have existed before the property was sold. The buyer must prove that the defect was already there before the deed of sale was signed at the notary’s office.
– A reasonable buyer must be unaware of the defect. If the buyer did not discover the defect upon close inspection of the property, they could have a case against the seller.

When we talk about a latent defect, we mean a defect that was not visible or that the buyer did not know about when they signed the deed of sale. In most cases the seller is unaware of the problem as well, which makes latent defects particularly difficult to anticipate.

How can I avoid latent defects?

As a buyer, you need to be vigilant. The first step is to work with a broker and an inspector who are familiar with the area. Then read the inspection report carefully and do any additional checks that might be recommended.

If you’re a seller, your real estate broker will be able to help you fill out the seller’s declaration and will recommend a pre-sale inspection.

What if I discover a latent defect?

If, as a buyer, you discover a latent defect after the sale, you must notify the seller in writing and let the seller see the defect before any repairs are done. Once the defect has been reported, it is in each party’s best interest to get an independent expert’s opinion.

What will my broker do?

Your real estate broker will check public information about the property and will objectively advise each party. They will try to discover anything that could be detrimental to the property and notify each of the parties accordingly.

If, despite every effort, latent defects are discovered after the sale, your broker can refer to you a competent legal expert to resolve the issue in due form.

 



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