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Material Latent Defects
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Sellers have a duty at common law to disclose latent defects about their property to a buyer. A material latent defect means a defect that cannot be discerned through a reasonable inspection of the property, including a defect that renders the real estate:
- Dangerous or potentially dangerous to the occupants;
- Unfit for habitation; or
- Unfit for the purpose for which the buyer is acquiring it if the buyer has made this purpose known to the seller.
Real estate licensees have a broader duty to disclose material latent defects under the Real Estate Services Rules. In addition to defects under common law, your real estate licensee must also disclose:
- A defect that would render the property unfit for the purpose for which the buyer is acquiring it if the buyer has made this purpose known to the licensee;
- A defect that would involve great expense to remedy;
- A circumstance that affects the real estate in respect of which a local government or other local authority has given a notice to the seller, indicating that the circumstance must or should be remedied; or
- A lack of appropriate municipal building and other permits respecting the real estate.
Common examples of material latent defects could include:
- High levels of radon;
- The fact that the basement leaks when it rains;
- Structural damage to the property;
- Failure of the building’s envelope (water ingress);
- Underground storage tanks located on the property;
- Problems with the potability/quantity of drinking water; and
- Un-remediated damage caused by the illegal use of the property, e.g. marijuana grow operation.
New installations or renovations of electrical or gas systems completed without appropriate permits and inspections are also considered examples of material latent defects.
If you do not disclose a material latent defect in your property, your licensee must make the disclosure themselves. If you try to instruct your licensee not to make the required disclosure, they are obligated to cease providing trading services to you. If you are unsure if a defect must be disclosed, speak to your licensee or seek independent legal advice.
Learn More About Material Latent DefectsDisclosure of Property Information
While there are no prescribed forms in B.C. to disclose property information, a common way to do this is through a property disclosure statement. This is a voluntary form completed by the seller that provides information about the condition of the property being sold.
It is best practice and in all parties’ interests that you complete the property disclosure statement accurately and to the best of your knowledge to enhance the marketability of your property. Although you can complete a “Property No Disclosure Statement” form if you cannot or do not wish to make any representations about the property, this may put you at risk of potential litigation in the future if latent defects are discovered that you knew about and failed to disclose at the point of sale. If you refuse to provide adequate disclosure to potential buyers, it may also be more difficult to sell your property, as buyers will question why no disclosure is being provided.