Updated February 15, 2023
You’ve just settled nicely into your new home and you’re surprised to discover that water has started to seep into the basement. Wasn’t the home inspection supposed to have caught this problem? Wasn’t the seller supposed to have declared or fixed this issue?
You could be facing what is known as a latent defect, a problem with the home that was not apparent upon visual inspection at the time of purchase. Read on to find out what a latent defect is, common kinds of latent defects, what to do if you find one, and what recourse is available.
A latent defect, also known as a hidden defect or inherent defect, is an issue with a home that is hidden or not apparent upon a simple inspection. It is also an issue of which the buyer or seller was unaware at the time of purchase. For example, water leaking into the space between the roof and the ceiling or mould growing behind a wall are examples of latent defect.
According to the Civil Code of Quebec, a latent defect must meet the following criteria:
In the eyes of the law, the seller of the home must guarantee that the immovable property being sold is free of latent defects. That includes defects which render it unfit for the use for which it was intended, or which so diminish its usefulness that the buyer would not have bought it or paid so high a price if they had been aware of them.
The seller must disclose any latent defect of which they are aware.
Latent defects also apply to any detached structures or any structure that is attached to the home, such as a chimney, a garage, a deck, or a shed.
Here are some common examples of latent defects:
It is important to know the difference between a patent defect and a latent defect. A patent defect is an apparent defect. Generally, the seller is not responsible for patent defects, since the buyer can see them (or at least discover them via home inspection). The seller can also inform the buyer about any non-obvious defects, in which case they become patent, since the buyer was made aware of them.
The buyer can always take into account these defects by adjusting their offer (lowering the purchase price or making the repairing of the defect one of the terms of sale).
Some examples of patent defects are visible cracks in a wall, rotting siding, or peeling paint.
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If you find a latent defect, you must first prove its existence by taking photos or by recording a video of the defect or related damage. You (or an expert) must also ascertain the nature and the extent of the defect. The seller must be given an opportunity to see the defect and associated damage, and be given a chance to remedy the problem.
The best outcome would be an agreement with the seller, either directly or through mediation. You should put any agreement you reach in writing to create a binding contract between you and the seller.
Failing this, you can send a notice of defect to the seller by registered mail or through a bailiff, before starting any repairs. The notice should include the following information:
You can also send a demand letter. The letter must include a description of the latent defect, a demand that the seller respects the guarantee against latent defects, and a deadline for answering the letter. These documents must be sent before taking any legal action.
In Quebec, buyers are protected from latent defects by the warranty of quality (also known as the warranty against hidden defects), unless the seller specifically indicates that the sale excludes the warranty of quality. In this case, the seller would insert a clause stating “without legal warranty, at your risks and perils”.
After discovering a latent defect, a buyer can demand the cancellation of the sale, a reduction in the sale price or that the seller repair the defect. If the buyer purchased the property from a builder, a professional seller or a real estate developer and can prove that they were aware of the defect, the buyer can claim damages.
In home insurance, a loss is a sudden and accidental event that causes damage to insured property. Since a latent defect isn’t sudden or accidental (nor is it an event), it is not covered by home insurance. However, damage caused by a latent defect, such as a fire or flooding, could be covered in certain cases.
For example, if improperly installed wiring within a home’s walls wasn’t discovered by a home inspection, they could be a latent defect. Replacing or repairing the wiring wouldn’t be covered by home insurance. But, if the faulty wiring later caused a fire, it’s the fire damage would still be covered by many home insurance policies.
Unless the situation is urgent (as in, the defect is dangerous or could lead to the destruction of the property), you should not proceed with repairing the defect because you would have to assume the costs of any repairs. You should instead try to reach a formal agreement with the seller. Failing that, you can send the seller a notice of defect or a demand letter, or eventually take legal action.
You have three years from the date of discovery of the defect, and not the date of purchase, to take legal action against the seller. However, you must advise the seller in writing of the existence of the defect within a reasonable time frame. Generally, a period of 6 months to one year is considered reasonable.
No. Any property purchased following a court order or decision is not eligible for the warranty.
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