Material Latent Defects

Sellers must disclose known material 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.

Material latent defects may also include:

• 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 may also be considered examples of material latent defects.