Managing Litigation – Patent vs. Latent Defects
By Nanette Kufeldt.
It is imperative that REALTORS® ask the right questions to determine the state of the property, current issues with the property and the history of the property. Those questions go a long way to ensure that the ultimate buyer has all of the information which is necessary to make an informed purchase. It also reduces the risk of litigation. If litigation does occur, investigation shows due diligence. At the end of the day, the Court is going to look at whether the right questions were asked and whether that information was communicated. This applies equally to REALTORS® representing buyers and sellers.
Patent defects are not required to be disclosed. Patent defects are those things that are discoverable by inspection and ordinary vigilance on the part of a purchaser. The Ontario Superior Court of Justice, in Robb-Sim v. Solomes, provided a description of patent defects: Patent defects are those that are discoverable by a reasonably prudent buyer without disrupting the property. A vendor has no obligation to bring patent defects to the attention of a buyer but must not take steps to deliberately conceal them. A professional home inspection should reveal any patent defects…
Latent defects must be disclosed because reasonably careful inspection will not reveal a latent defect and it is not one readily discovered by a buyer upon examination. Often, information about latent defects are only within the knowledge of the seller but in some cases even the seller is unaware. Again, the Court in Robb-Sim v. Solomes provided a description: Latent defects are not usually discoverable by a prudent buyer making an ordinary inspection of the property because they are hidden behind or beneath immovable surfaces in the home. Being that latent defects are not visible during ordinary inspection, a vendor may not be aware of their existence either. However, if a vendor is aware of such defects he or she must disclose them to the buyer.
An Example In one case, the Court heard that the buyers found mold in a basement where there had been flooding many years before the sale. While there had been professional cleaning and drying after the flooding there was an obvious musty smell in the basement that the sellers covered with the use of deodorizers. They advised those viewing the home that they used the deodorizers to mask cigarette smoke. It was held that the sellers should have done more to inspect for mold, which was characterized as a latent defect and they were held liable for the cost of repair. The Court believed the REALTOR®’s evidence that he did not notice any issues and was unaware of the latent defects. The claims against him and the brokerage were dismissed. It should be noted that there was evidence that the REALTOR® specifically asked about water issues and those were documented in a separate disclosure form. The information the sellers provided was found to be untruthful.