Material Defect

Learn what material defects are in Canadian real estate, why they must be disclosed, and how they impact buyer protection and legal responsibility.

Material Defect

May 22, 2025


What is a Material Defect?

A material defect is a significant issue with a property that may impact its value, safety, or livability, and that must be disclosed to potential buyers by law.

Why Material Defects Matter in Real Estate

In Canadian real estate, material defects go beyond minor cosmetic flaws. These issues can include:
  • Foundation cracks or structural instability
  • Mold, water damage, or pest infestations
  • Electrical or plumbing hazards
  • Previous fire or flood damage

Sellers have a legal obligation to disclose known material defects to prospective buyers. Failing to do so may result in legal liability, cancelled sales, or lawsuits after closing. Disclosure rules vary by province, but courts consistently uphold the buyer’s right to be informed of defects that could impact decision-making.

Buyers are also encouraged to conduct home inspections to uncover hidden issues. A seller’s failure to disclose a known material defect, particularly one not easily observable, may be deemed fraudulent or negligent.

Understanding what constitutes a material defect protects buyers from unexpected repair costs and helps sellers comply with disclosure laws.

Example of Material Defects

A seller discloses a repaired basement flood from three years ago. The buyer includes a home inspection clause to ensure the problem hasn’t recurred.

Key Takeaways

  • Major issue affecting safety or value.
  • Must be disclosed by seller.
  • May trigger legal disputes if hidden.
  • Buyers should request inspections.
  • Laws vary by province.

Related Terms

  • Disclosure Statement
  • Home Inspection
  • Latent Defect
  • Seller Liability
  • Real Estate Law

Additional Terms

Bridge Financing

Bridge financing is a short-term loan that helps homebuyers cover the financial gap between buying a new property and selling their existing one.. more

Bridge Loan

A bridge loan is a short-term financing option that allows homeowners to borrow against the equity in their current property to fund the purchase of. more

Firm Offer

A firm offer is a legally binding agreement to purchase a property that contains no conditions. Once accepted, it commits both the buyer and the. more

Foreclosure

Foreclosure is a legal process through which a lender takes ownership of a property when the borrower defaults on their mortgage payments.. more

Closing Costs

Closing costs are the various fees and expenses that buyers and sellers must pay to finalize a real estate transaction, separate from the property’s. more

Assignment Sale

An assignment sale occurs when the original buyer of a property (the assignor) sells their rights in the purchase agreement to a new buyer (the. more

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