Latent Defect

Learn what a latent defect is in Canadian real estate, when sellers must disclose it, and how buyers can protect themselves during inspection and purchase.

Latent Defect

May 30, 2025


What is a Latent Defect?

A latent defect is a hidden flaw in a property that is not visible during a typical inspection and may affect its safety, use, or value.

Why Do Latent Defects Matter in Real Estate?

In Canadian real estate, sellers are legally obligated to disclose known latent defects that make the home unsafe or unfit for habitation. These cannot be easily detected by the buyer or inspector.



Examples of latent defects include:
  • Mold behind walls
  • Foundation cracks or structural instability
  • Undisclosed water damage or past flooding



If the seller fails to disclose a known latent defect, they may face legal consequences. Buyers should include inspection conditions and seek professional advice for potential red flags.



Understanding latent defects protects buyers from surprise repairs and helps sellers meet legal disclosure obligations.

Example of a Latent Defect

After moving in, the buyer discovered black mold behind the drywall. The seller had not disclosed it, resulting in a legal claim for latent defect.

Key Takeaways

  • Hidden flaws not visible in standard inspection.
  • Must be disclosed if known.
  • Can affect safety or habitability.
  • May lead to legal action if concealed.
  • Strong reason for buyer due diligence.

Related Terms

Additional Terms

Construction Loan

A construction loan is a short-term, interim financing option used to fund the building or major renovation of a property, with funds disbursed in. more

Certificate of Occupancy

A certificate of occupancy is an official document issued by a municipal authority confirming that a building complies with applicable codes and is. more

Bylaw Variance

A bylaw variance is official permission granted by a municipal authority allowing a property owner to deviate from local zoning or building bylaw. more

Absorption Rate

Absorption rate is a metric that measures the rate at which available properties are sold or leased in a specific market over a given period.. more

Corporate Restructuring

Corporate restructuring refers to the reorganization of a company’s operations, assets, or liabilities, often under court supervision, to improve. more

Consumer Proposal

A consumer proposal is a formal, legally binding agreement in Canada between an individual and their creditors to repay a portion of their debt over. more

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