What is a Material Latent Defect?
A material latent defect is an important issue with a property that is hidden. In the context of real estate, a material latent defect might be a damaged foundation, a clogged sewer pipe or even the lack of an important permit. The Real Estate Council of Alberta refers to a material latent defect as a “physical defect that is not discernable through reasonable inspection” that also makes the property potentially dangerous to live in, unfit to live in or that might be very expensive to repair.
Real Estate Agent Explains Material Latent Defects
We have all heard about defective products. This coffee machine doesn’t heat up, or this left shoe is much bigger than the right one. A house or condo can be defective, too. And when a property is defective, that can be a big problem. So what is the deal with this kind of defect? What does the material part and the latent part mean?
Well material simply means important. So this defect is an important one. That is, that the defect is going to cause a lot of trouble for the owners of the property and it is going to cost a lot to fix the problem. An example of a material defect is water in the basement of a house. That is a big issue. You can’t really use a basement with water in it, and it would likely be expensive to fix this issue. The cost to remedy an issue is really the test in whether something is material or not.
Latent defects, however, are problems or issues that are hidden. So these things are not easily discoverable. They may be hidden on purpose or just simply hidden because they happen to be covered by something else and aren’t that noticeable. A latent defect example would be something like a leaking roof. You can’t see it and it only leaks when it rains. If the ceiling isn’t stained, then that defect is latent.
In real estate, latent defects must be disclosed. According to law, sellers cannot hide or mislead buyers about material latent defects, and real estate professionals must disclose any they are aware of.
Why Does It Matter?
If you buy a house that has a material latent defect, you’re going to be on the hook for a repair bill and it’s going to be a headache. So it’s a big deal. If you are selling a house, you need to disclose defects that are not obvious. If you don’t and those are uncovered later, you could land in legal hot water.
If you are buying, you’re going to want to get a house inspection or read through condominium documents carefully to make sure there isn’t something going on. That way you might just be able to discover if there is this is a property that is worth the price or not.
