Browse Proptionary encyclopedia

Build your real estate vocabulary to be able to communicate and invest more effectively and professionally.

Latent Defects

DEFINITION

Defects that are not clear to the average party.

EXPLANATION

In terms of materials facts, a latent defect is a defect that is not clear to the average party. A patent defect is a defect that is obvious to the average party. Sellers and agents should be aware of all patent defects of a property.

In real estate law, a latent defect is a type of defect, either functional or appearance, that could not be known even with an inspection of a property. In other words, a latent defect is difficult to detect, either because it is insignificant or small to the point where it would hard for the average party to discover.

Caveat emptor is the law that oversees general property law. Under caveat emptor, a buyer has the duty to conduct inspections, so long as those inspections do not affect the integrity of the property they are inspecting or cause the seller an undue burden, such as destroying a portion of the property or costing the seller anything unreasonable to perform the inspection.

For example, assume a buyer wants to test the integrity of a property’s foundation. Oftentimes the only way to do that is to conduct destructive testing that would destroy a portion of the wood. This of course would be an unreasonable request for the seller to accept. In a situation like this the buyer would have to be aware when deciding to make the purchase, even if he/she does not have the right to perform testing.

Caveat Emptor and Latent Defect

Caveat emptor is the concept that a buyer must be aware of the condition of the property when purchasing a property. They cannot late go back and later claim they were unaware because ultimately it is the duty of the buyer to verify material facts unless the seller intentionally conceals facts relating to the condition of the property.

Although a buyer is ultimately the party responsible for making inspections prior to purchasing property, this does not excuse a seller from full liability. Sales contracts typically contain a clause about “latent defects” and how the seller can be responsible if items are later discovered regarding the condition of the property. When this occurs, the seller must prove that they were not aware of the condition of the property and therefore cannot be held liable because they did not intentionally conceal any information from the buyer.

If it is discovered that the seller was aware of the condition of the property and intentionally misled the buyer, the seller will be subject to fees, potentially be forced to fix the defect that was not disclosed to the buyer, or have the sale rescinded.

[quiz-new]