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

Public Realm Improvements

Public realm improvements are enhancements to public spaces such as sidewalks, parks, plazas, and streetscapes, often funded or contributed by. more

Mortgagee in Possession

A mortgagee in possession is a lender who takes control of a property after borrower default, but before foreclosure or power of sale. The lender. more

Lease Surrender Agreement

A lease surrender agreement is a negotiated contract between a landlord and tenant that ends a lease before its scheduled expiration. Terms may. more

Green Infrastructure

Green infrastructure refers to natural or engineered systems that manage stormwater, reduce heat, and improve sustainability in developments.. more

Escrow Holdback

An escrow holdback is a portion of funds withheld at closing and held in escrow until specific conditions are met, such as completion of repairs,. more

Underused Housing Tax

The Underused Housing Tax (UHT) is a federal annual 1% tax on the value of vacant or underused residential property owned by non-resident,. more

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