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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

Rent Control

Rent control refers to government regulations that limit how much landlords can increase rent for residential tenants each year.. more

Receivership

Receivership is a legal process where a court or secured creditor appoints a receiver to take control of a borrower’s assets, such as property or. more

REALTOR

A REALTOR is a licensed real estate professional who is a member of the Canadian Real Estate Association (CREA) and adheres to its Code of Ethics and. more

Property Use History

Property use history refers to the documented past uses, functions, and occupancy of a property, which may affect environmental risk, zoning, or. more

Property Management

Property management is the oversight and administration of real estate assets on behalf of the owner, covering leasing, maintenance, financial. more

Property Maintenance

Property maintenance refers to the ongoing upkeep, repair, and management of a building or land to preserve its safety, functionality, and appearance.. more

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