reasonable inspection

Legal obligations surrounding property defects

Posted on by Behdad Hosseini

property defects

Nobody wants to buy a property only to learn afterwards that there’s a big crack in the basement wall that leads to regular flooding. This is a worst-case scenario in real estate that buyers obviously want to avoid, as do honest sellers. However, a revelation of a property defect after the transfer of title doesn’t always mean the seller is responsible. This is where basic knowledge of real-estate law is necessary.

Caveat emptor

There are two basic types of property defects that need to be differentiated from one another. A patent defect is one that is obvious upon basic inspection. So, in the example of a crack in the basement wall, if a prospective buyer would have seen it simply by going to the basement and taking a look — which any reasonable property buyer should be doing anyhow — then the seller would not be responsible after the sale is made. It was the buyer that decided not to perform some basic due diligence. In this case, the commercial principle of caveat emptor, or buyer beware, would apply.

However, there are situations where the seller would be responsible for a defect after transfer of a title. A latent defect is one that becomes apparent after the sale of the property. So, again, in the example of the crack in the basement wall, if the same crack had been painted over thoroughly, was not in any way visible, and, furthermore, was concealed from the buyer, then the responsibility for the defect would lie with the seller. Caveat emptor would not apply.

Buyer and seller

In essence, both the buyer and the seller of a property have obligations regarding defects. On the part of the seller, there has to be an attempt to conceal a defect; in other words, to commit fraud, in order to be held responsible for a defect. On the part of a buyer, a reasonable inspection should always take place to ensure a lack of patent defects.

In addition, contracts can be made that include representation by the seller regarding the condition of the property. Written representations are always more desirable than verbal promises. Contracts can also include warranties that outline the seller’s responsibilities in the event of a discovery of defect, and the period of time such responsibilities remain in effect.

If you’re in need of professional legal advice, please phone us here at Hosseini Law Firm (HLF) for a 15 minute free consultation: 416-628-4635, or please use the contact form provided on this page.

Thank you. 

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