Patent Defects / Material Latent Defects / Stigmas

Types of Property Defects

When buying, selling, or renting a home, potential defects can significantly impact the transaction. There are two key types of defects to be aware of:

  • Patent defects are visible issues that can be identified during a reasonable inspection. Examples include broken windows, damaged floors, and any other issues that can be seen by a buyer or property inspector during a typical inspection.
  • Material latent defects are hidden issues that cannot be discovered during a reasonable inspection and may render the property dangerous or costly to repair. These defects are defined under the Real Estate Services Act. Consulting with a real estate professional is crucial to determine if these defects exist and if legal disclosure is required.

Disclosure Requirements

Sellers and landlords must disclose all known material latent defects to potential buyers or tenants before entering into a contract. This disclosure must be made in writing, using a separate document from the purchase contract or lease. Sellers typically use a Property Disclosure Statement, while landlords create a separate document for written disclosure.

Real estate professionals are required by the Real Estate Services Act to disclose any known material latent defects. Disclosure cannot be included in the purchase contract or lease but must be provided separately.

Legislation is clear that all known material latent defects must be disclosed. If you are uncertain about the necessity of disclosure, consult with your real estate professional or seek an independent legal opinion.

Stigmas

A stigma in real estate refers to concerns based on personal beliefs, values, or perceptions that do not affect the physical structure or land. Examples of stigmas include specific numbers in the property address associated with good or bad luck, the presence of a criminal in the neighborhood, a death occurring on the property, and perceptions of the property being haunted.

Sellers and landlords are not required to disclose stigmas unless specifically asked. If asked, the seller can choose to answer truthfully or refuse to answer. Buyers or tenants receiving false or misleading information may have legal options. It is advisable to seek legal advice if needed.