Latent Defect in Real Estate

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“An immovable property with latent or hidden defects we can’t see without a magnifying glass. Latent defects must exist at the time of sale and have not been obvious to a prudent buyer under the same circumstances. But are serious and important enough to qualify as latent defects.”

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Latent Defect in Real Estate

The defect must have existed when the buyer purchased or before the purchase. However, it may materialize later if the seller knows about it within the applicable time frame.

Lastly, the defect in question must render the immovable property unsuitable for its intended purpose so that, if the buyer had known about the defect, he would never have bought it or, at the very least, would have paid less for it. A Latent Defect in Real Estate must meet all these criteria to be considered one. Section 1726 of the Civil Code of Quebec is crucial for the protection of buyers from latent defects.

This section ensures the buyer a quality warranty except when the property sells without any legal warranty. The conditions are as follows:


Did the defect exist before the purchase to qualify it as latent?

What is latent defect? A latent defect does not need to exist before the purchase to qualify as latent. Therefore, it is optional that the defect existed before the purchase for it to qualify as latent.

Sometimes, latent defects only appear after purchasing the property. Even if the latent defect appears afterward, it is important to prove that it existed at the time of the purchase.


Is The Defect Hidden?

As a second aspect, a latent defect is if, after a routine nondestructive pre-purchase building inspection, the defect is not apparent (hidden) or obvious to a prudent buyer. If a reasonable person cannot see the defect, it cannot exist.

Neither the buyer nor the seller handles opening walls or digging holes to discover latent defects. However, we must objectively evaluate the hidden defects. We will do so based on the level of inspection the buyer carried out. They used diligent and prudent criteria.

To determine whether a diligent and prudent buyer would have discovered the defect or the potential risk of a defect without the help of an expert, we need to look into whether the diligent buyer would have discovered the defect on their own or with expert help.

In the case of Mr. X buying a house with a latent defect, the court will not determine whether he saw or knew about the defect personally before purchasing the property but whether he would have seen it if he had compared it to what an average person would have expected.


Does The Flaw Cause The Property To Be Unsuitable To Be Used For Its Intended Purpose?

A latent defect must render the immovable property unusable for the intended purpose. The defect must be so grave that the buyer would have never bought the property.

If the buyer knew about the defect before purchasing the property, they would not have purchased it.


The Buyer Did Complain About This Defect In The Sale To The Seller.

After the buyer becomes aware of a latent defect, they must report it to the seller within six (6) months. This notification should take the form of a letter of demand to put the seller in default for the latent defect(s) on the property.

This letter and placing the seller in default allow the seller to inspect the property, observe any alleged latent defects, and repair or deny them before they come to pass judicially before the courts.

The seller can either repair or hire an expert to repair the defect(s) or deny the alleged latent defects in question.


Is The Defect Important And Serious?

Those defects that require minor repairs or are insignificant financially do not belong to the latent defect category. There must be a serious and important latent defect.

All the conditions stated above must be met for the court to view the defect as latent.


A Latent Defect Claim’s Legal Basis

What are latent defects? For a seller to be liable for the costs associated with a latent defect, the buyer must prove each of the following factors:

  • Latent defects render the property uninhabitable;
  • There was knowledge of the defect on the seller’s part, and,
  • The seller did not disclose the defect, concealment, or misrepresent the defect’s nature.

It depends on the nature of the seller’s conduct and whether they have engaged in negligent or fraudulent misrepresentation when they have failed to disclose a latent physical defect.


A Latent Defect Claim’s Legal Basis.


The buyer relied on the seller’s representations or silence when deciding to purchase the property. The buyer might not have bought the property if they were aware of the latent defect real estate when they signed the contract or may have asked for a price reduction.

As noted above, buyers may only claim against a seller where the defect is latent, rendering the property unfit for habitation. According to the three criteria, the first need must be latent.

A caveat emptor principle applies when we can discover the defect by ordinary diligence, and the buyer cannot recover the repair cost from the seller when it is a patent defect. Before signing a purchase and sale agreement, buyers should carefully inspect a property for obvious signs of defects.

This defect must not only be latent, but it must also render the premises uninhabitable. A defect that interferes with the buyer’s enjoyment of any part or the entire property is considered a defect that interferes with the buyer’s enjoyment. Whether this is the case will depend on the defect’s type and severity.


Aware of the defect.

In addition, the seller must show that they were aware of the defect. Establishing this can be challenging. The buyer may sometimes be able to prove that the seller concealed the defect; otherwise, circumstantial evidence may have to be presented, for instance, that the seller had before completed renovations in the defect’s area.

Unless the seller knows the problem, they cannot be held liable for failing to disclose it if they failed to disclose it. The final need is the seller failing to disclose the defect or misrepresent its presence or nature. This requirement is fairly straightforward. Most sellers will have failed to disclose the defect.

It is generally possible for a buyer to recover the cost of repairing defects from the seller when all three requirements apply.


Steps to Find the Most Distressing Things about Your New Home If You Discovering Hidden Defects

You may find one of the most distressing things about your new home as a new homeowner is discovering hidden defects. When you discover the condition of the property you thought you were getting is completely different from what you got, it is extremely upsetting. You probably feel cheated by the seller, which makes you angry.


Settlement discovery.

In post-settlement discovery, the following hidden defects are common:

  • The mold
  • Damage from water
  • Infestation by termites
  • Septic & well problems
  • Problems with electricity
  • Problems with the roof
  • Problems with plumbing
  • Structural problems & foundations

While they still had the opportunity to get out of the contract, many people wondered why the problem was not noticed during the home inspection. Before settlement, neither the buyer nor the home inspector would be aware of many of the abovementioned issues.

Most buyers have experienced home inspectors who can help uncover some of these unseen issues. However, even the most experienced home inspectors can’t spot some hidden defects. It is common for homeowners to discover these major problems after they have lived in the house for several years.


What Qualifies as a Latent Defect?

What is a Latent Defect in Real Estate?  It’s common for new homeowners to discover mold problems. Here’s what happens:

After settlement, Michael renovated the basement walls and removed the outdated 1960s wood paneling. The property needs cosmetic updates, but Michael believes it has “good bones.” A large infestation of mold lurks behind the paneling, shocking Michael.

Sometimes, a seller was aware of a defect but chose not to disclose it because they did not want to lose the sale. This means that the seller should have disclosed what was legally required to disclose.

The question then becomes: Can you demonstrate that the seller knew about the defect before they sold you the house? The seller may be liable for not disclosing a latent defect if the answer is yes.


The Law vs. Reality

In California real estate law, it is not always the case that Latent Defect in Real Estate reveal themselves. Due to this, it’s common for new homeowners to face very high repair bills, sometimes reaching tens of thousands (or even more).

The homeowner usually reacts emotionally to these situations – angry that the seller tricked them and fearful about how they can pay to fix the problems. It’s understandable to feel emotional in these situations, but the best thing you can do is to remain calm, take a deep breath, and take the following steps.


What Steps We need to Take If we Discover Hidden, latent defects in real estate:

Do not immediately change or repair water in your new basement or rot, mold, or termite damage that you suspect already existed when you bought the house. Instead, follow these steps:–


Importance to protect the health of your family.

It is of utmost importance to protect the health and welfare of your family during the renovations. If mold, faulty electrical, or other potentially hazardous conditions exist in the structure, you should immediately vacate the building and seek professional help with latent fact real estate.


STOP! Do not destroy the evidence.

Remove the problem of latent defect in real estate, clean it up, or fix it – you will lose valuable evidence supporting your claim.


Immediately solve the problem of latent defect in real estate.

Take pictures and videos of the existing conditions as soon as possible before you do anything to solve the problem if the defect does not pose any immediate physical threat to you or your family.

If the situation is dangerous, proceed to step 4 and have an expert document it. This evidence could be important if you pursue legal action against the seller.


Contact an experienced home improvement contractor.

To get an estimate of what it will cost to fix your issue, contact an experienced home improvement contractor, mold remediation specialist, structural engineer, or another appropriate professional, depending on the problem you are experiencing. Make sure to document everything in writing and get two quotes.


Contact an experienced real estate lawyer.

Contact an experienced real estate lawyer in California immediately to discuss your options and next steps after going through the above steps. You must consult an attorney before taking any steps to remedy the problem, as these matters are often time-sensitive.

Consult a competent and experienced real estate litigator familiar with this subject matter before taking action about Latent Defect in Real Estate. It is critical to seek counsel from an attorney with experience and knowledge of California real estate law since not all litigators – or attorneys – are well-versed in this field.


Weigh your options.

The first instinct of many homebuyers in these situations is to “sue the seller.” However, as discussed earlier, you should act logically, not emotionally, in these situations. By evaluating the following factors, your attorney will help you better understand your options and create a plan:


How Costly Is The Issue To Fix?

The cost of pursuing legal action against the seller will probably not be worth the time, money, or hassle if it will only cost you a few hundred dollars to fix the problem. In most cases, you’re better off fixing it yourself and moving on with your life, but if you’re facing thousands in repair bills, you may want to seek damages from the seller.

It is not enough to suspect that the seller was aware of the problem of the Latent Defect in Real Estate before signing the contract. You must prove it to have a case against the seller.


The Conclusion

Accordingly, the defendants failed to fulfill their obligation to provide all the information necessary to the buyers to decide whether or not to purchase the property.

Superior Court rules that all buyers are entitled to receive all relevant information about the property they are considering buying and that sellers and real estate agents are responsible for providing this information. A civil or professional lawsuit can follow if they fail to comply.

Alec Stroup

ALEC STROUP Associate Attorney  Roseville Office  1-866-471-6981  Alec...

Hedy Ghavidel

HEDY GHAVIDEL Managing Attorney  Roseville Office  1-866-471-6981  Bio...