How to Handle Hidden Defects
It’s not uncommon to find hidden problems when you first buy a home. Here are the most common defects and what to do about them.
By Emily Southey | 5 minute read
While it’s normal for recently purchased homes to require a few minor upgrades, discovering a significant defect can put a serious damper on your new adventure. That said, in most Canadian provinces, sellers have a legal obligation to disclose certain information to a potential buyer. For example, in regards to defects, the seller must disclose any latent defects they are aware of.
Hidden defects are those that are not obvious or visually apparent. They are the opposite of patent defects, which are obvious, visually observable flaws, such as a hole in the wall. As these can be easily detected during an ordinary inspection, the seller is not obligated to disclose such defects.
However, for defects that are much harder to spot, such as a leaky foundation, the seller has an obligation to disclose them. It’s worth noting that given how inconspicuous hidden defects can be, a seller may not be aware of one in their home. If a hidden defect is unknown to the seller or developed after the property was sold, the seller is not liable.
Latent Defect vs. Hidden Defect: How Do They Differ?
The short answer? They don’t! Latent defect is simply another name for the term hidden defect and refers to a defect that is seemingly invisible or hidden and cannot be detected in an ordinary inspection.
Types of Latent Defects in Ontario Homes
Latent defects are often hidden or invisible to the untrained eye, which makes them harder to detect than patent defects. The more educated you are on the most common types of latent defects in Ontario homes, the better off you will be. When purchasing a home in Canada, be sure to inquire about or inspect your home for the following: rotted wood, pest infestations such as termites, rusted pipes, bad roofing, mould, faulty wiring, hidden water damage, septic system issues, and HVAC issues.
“Hidden defects are those that are not obvious or visually apparent. They are the opposite of patent defects, which are obvious, visually observable flaws, such as a hole in the wall.”
How Buyers Can Protect Themselves From Hidden Defects
To protect yourself from latent defects in the home-buying process, we urge all first-time homebuyers to opt for a home inspection before closing on the property. A home inspection conducted by a qualified professional will help you identify any defects, patent or latent, that you may not have otherwise been aware of. With the results of the home inspection, you can make an informed decision about whether to purchase a specific property.
Beyond a home inspection, ask the seller to complete a Seller Property Information Sheet (SPIS). This is the official document where a seller must disclose any known hidden defects in the home. Carefully read through the seller’s answers and don’t be afraid to ask questions. For example, if the seller claims there are no issues with the furnace, ask when a professional last inspected it. Ideally, buyers should request a copy of the SPIS before the home inspection takes place so the inspector can review it.
What to Do if You Find a Hidden Defect in Your Home
So you found a hidden defect in your home. What now? The problem with hidden defects is that they are often invisible, which means even the most vigilant homebuyers may discover one after the closing of a sale. If you find a hidden defect in your newly purchased home, don’t panic.
First, it’s important to note that in Ontario, a buyer has two years from the day the hidden defect was found to bring a lawsuit against the seller. This two-year period typically begins on the day the buyer discovered the defect but may also begin on the day a reasonable person would have become aware of the defect. When a hidden defect is discovered, the buyer often assumes that the seller knew about it and failed to disclose it. Regardless of whether this is true, the onus is on the seller to prove that they did not know about, nor could they have known about, the defect. If the seller can successfully prove this, the buyer is not likely to win the lawsuit.
For a buyer’s claim to be successful, they typically must prove that the seller (or their real estate agent/broker) made a certain representation of a fact to them, that this representation was false, that the seller made this false representation knowingly or recklessly, that the seller intended for the buyer to act on this representation, and that the buyer acted on this representation and has suffered losses as a result. To increase your chances of a successful hidden defects lawsuit, you may wish to hire a lawyer.
Frequently Asked Questions
What is meant by hidden defects?
Hidden defects, otherwise known as latent defects, are those that are not visually apparent or easily discoverable upon inspection. They are the opposite of patent defects, which are obvious flaws, such as a crack on the side of the home. For this reason, sellers do not have an obligation to disclose patent defects as they do hidden defects.
What are invisible defects?
Invisible defects is another name for hidden or latent defects. Invisible defects get their name from the fact that they are often hard to spot, hiding behind walls, or in pipes.
What is an example of a latent defect?
Examples of latent defects include faulty wiring or knob-and-tube wiring, lead in the drinking water, a basement that leaks each spring, a leaking roof without any obvious water damage, pest infestation, mould behind the walls, or electrical issues.
What is most likely to be a latent defect?
Common latent defects may include damage behind walls, such as bad wiring, rusted pipes, mould, or a termite infestation.
Who is liable for latent defects?
The answer to this question depends on whether the seller knew about the latent defect or not. In Ontario, sellers are required to disclose any known hidden defects to the buyer. Therefore, if a seller is aware of a hidden defect and fails to disclose it to a prospective buyer, they will be found liable. If a buyer discovers a hidden defect after the closing of the sale or even after they’ve taken possession of the property, they can file a lawsuit against the seller. The onus is on the seller to prove that they did not know about the defect, nor could they have reasonably known about it.
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