MUST READ: Peel Region Votes To Lower Development Charges By 50%

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

Budgeting

Budgeting in real estate refers to the process of forecasting and managing income and expenses associated with owning, operating, or developing a property.. more

Tenant Improvements

Tenant improvements refer to custom modifications or build-outs made to a leased space to suit the tenant’s operational needs, often negotiated as. more

Highest and Best Use

Highest and best use refers to the reasonably probable use of a property that results in the highest value, provided it is legally permissible,. more

Gross Lease

A gross lease is a commercial lease where the tenant pays a fixed rent, and the landlord covers most or all operating expenses such as property. more

Brownfield

A brownfield is a property that was previously used for industrial or commercial purposes and is now vacant or underused, often requiring. more

Record of Site Condition (RSC)

A Record of Site Condition (RSC) is a formal document filed with a provincial environmental authority certifying that a property meets required. more

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