Patent vs. Latent Defects and Caveat Emptor

The local housing market appears to be on the rise. While this is a good sign of our recovering economy, it is also an appropriate time for purchasers to remind themselves of some of the risks and their legal rights when purchasing a home.

The maxim, “buyer beware” (or caveat emptor), applies to purchasing a house as much as it does an apple. As stated by Michael D. Akerly, et al, eds., British Columbia Real Estate Law Guide (North York, Ont.: CCH Canadian Limited, 2010) at page 3525:

Defects are regarded as being of two kinds, latent or patent.

Patent defects are those that can be discovered by inspection and ordinary vigilance on the part of the purchaser. With respect to these, the ordinary rule is caveat emptor.

Latent defects are those which would not be revealed by any inquiry which a purchaser is in a position to make before entering the contract (34 Halsbury’s Laws of England, 3rd ed., p. 211, s. 353).

A vendor is not under any obligation to disclose a patent defect because a purchaser could or should have detected the defect by doing a reasonable investigation of the home. For example, if a bannister is broken, you have no legal recourse against the vendor for the broken bannister after purchasing the home.

Where a vendor makes efforts to conceal a patent defect in order to mislead a purchaser or lull their suspicions, this action may be considered fraudulent and the purchaser may have a legal right to recover against the vendor as a result.

Likewise, if a vendor was aware of a latent defect and failed to disclose it, this may be construed as a misrepresentation and give a purchaser a legal right to recover against the vendor.

So how do you protect yourself as a purchaser? Below are just a few examples.

  1. Hire a competent home inspector to investigate your potential home. A good home inspector will ensure that you are aware of any patent defects before you purchase the home.
  2. Take the time to do your own thorough investigations of the home.Don’t be satisfied with what the vendor’s realtor may tell you about the state of a home. Poke, prod and do whatever you have to in order to be satisfied that your potential home is in a state you find acceptable.
  3. Carefully review the disclosure statement and follow-up on any concerns you may have. A disclosure statement is generally incorporated to all standard contracts of purchase and sale and will disclose facts with respect to many of the major aspects of a home’s structure and foundation. The disclosure statement is broad, so if there are any remarks which cause you concern, you can insist on getting more details.
  4. Incorporate any representations or warranties that enticed you to purchase the home into your contract of purchase and sale. Most contracts of purchase and sale contain a “no other representations or warranties clause”. For example, if the vendor has told you that the fruit trees in the backyard are prize winning and you will be able to enjoy those trees and profits from their fruit, unless that representation is incorporated into the contract, you may have no legal right to recover if that statement turns out to be untrue.
  5. Visit your potential home at different times of the day/week. Some issues with a home are only discoverable under certain conditions, so make sure to visit during different weather or times of the week. For example, in Trakalo v. Hodges, [1995] B.C.J. No. 2278, 1995 CanLII 2183 (BC SC), the plaintiffs only visited the home once for 40-50 minutes, but it turned out that over time and especially in humid weather, the home overwhelmingly smelled of cat urine. Although the plaintiffs were able to recover because of the latent nature of the defect, avoiding the purchase altogether may have made their lives much easier.Likewise, many purchasers visit their future home mid-seek during the daytime only to discover that rush hour traffic or weekend activity renders their home less desirable than anticipated. Those issues would be patent in nature and would fall within the realm of buyer beware.
  6. Ask the vendor directly about major concerns with the home that are personal to you and let the vendor know how important the issue is to you. Also get the answer in writing and think about incorporating it into the contract (see point 4). For example, if you have a major pet allergy, tell the vendor that this is a material concern for your and ask the vendor whether they have pets. Get the vendor to commit to writing whether they were aware of any pets in the home. Ideally this would be incorporated into the contract to give you a right of action based on breach of contract if that representation turns out to be untrue, but having the representation in writing may assist in recovering against the vendor on the basis of misrepresentation if needs be. Stating that the issue is a major consideration in you choosing whether or not to purchase the home may also assist in any future litigation that may arise.

The foregoing is for informational purposes only and is not legal advice, nor should be construed as such. If you are experiencing any legal difficulties, please feel free to contact any of our qualified lawyers.

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