05 Nov Disclosure of Material Latent Defects
“What’s Required, and When.”
The basement leaks, but only in heavy rain. The damage from the last flood has been repaired but not the source of the leak. The property showings have been through the dry season and there are no visible signs of these leaks or damage.
Is the leaking an issue that needs to be disclosed to potential buyers?
Although sellers might not realize it, this is important information that does need to be disclosed to buyers. It’s just one example of a MATERIAL LATENT DEFECT: a defect that isn’t apparent through an ordinary inspection, but which materially affects the property’s value.
Before there is an accepted offer – make sure your real estate consultant has disclosed in writing to the prospective buyer all known defects.
As a seller – if you have to think about a defect even for a split second in terms of whether or not you should disclose it or not – disclose, disclose, disclose. There is far too much case law that could have easily been avoided if sellers were up front with buyers right from the beginning.
This same advice should also be considered whether a property is for sale, for lease or for rent, written disclosure of material latent defects must be made before any agreement is entered into.