For a defect to be considered “hidden” (or “latent”), it must fulfil three conditions. As its name indicates, it must be hidden or “not apparent”. Only after a thorough and careful visual examination will it be possible to state that a defect is hidden. The three conditions, below, must be fulfilled in order to consider a defect as “hidden”..
What is a defect?
A defect is a weakness, or flaw, that affects the quality of a building. This flaw is so substantial that the owner no longer has the full and ordinary use or enjoyment of his or her property. The flaw becomes a “defect” if it is so serious that had the buyer known about it before the purchase, he or she might not have bought the property or paid as high a price to obtain it.
Criterion 1: the flaw is not apparent
The law doesn’t require that a potential buyer hire a building inspector as the buyer can make the visual examination him or herself. Hiring an expert, however, presumes the seriousness and attentive nature of the inspection. Moreover, the purchaser will be able to sue an inspector should he or she fail to identify an apparent flaw during the inspection. It is important to note that if apparent clues could indicate the presence of a hidden defect, a careful buyer should be diligent and make arrangements for a more detailed inspection by an expert. Without this extra step, it will be difficult to plead that the defect was truly hidden.
For example, if there is an apparent swelling in one of the walls due to humidity during an inspection, and the purchaser does not deal with the issue in greater depth, it will be difficult to establish that the defect was hidden when the reason for the swelling was poor water flow off the roof. The apparent clue of a more serious existing defect should set off alarm bells for an attentive inspector.
Criterion 2: the buyer doesn’t know about it
Secondly, the flaw must not be known by the buyer. For instance, even though a flaw might be physically hidden behind a wall, if the buyer knew about it, the flaw would therefore be considered apparent. The buyer’s knowledge of the flaw may have allowed him to make a lower offer on the property. The possibility of suing the vendor would then become an unwarranted double compensation. A vendor, however, is still responsible for a hidden defect even if he or she did not know about its existence. On the other hand, the buyer who is warned by the vendor about a defect that is not apparent can no longer claim that is was hidden.
Criterion 3: existed at the time of the purchase
Finally, the hidden defect must have existed at the time of purchase. Indeed, if the hidden defect appeared after the sale of the property, cracks in the foundation for instance, the vendor will not be deemed responsible.
It is rather interesting to note that case law considers inherent risk to some types of buildings when evaluating the hidden defects. For example, cracked foundations on a building that is located in an area with expansive clay soil will most likely not be deemed as a hidden defect. Indeed, a judge may very well say that a diligent buyer should have known the risks associated with that particular soil.
By definition, a flaw that is apparent is not hidden. Apparent flaws are known by the buyer at the time of the purchase unless the latter was negligent during the inspection. Even though these flaws can lead to damages and inconveniences to the purchaser, they cannot be claimed against the vendor. The buyer could have negotiated the price down because of said flaw, and this itself is a type of compensation.
You have identified a hidden defect? Send a demand letter!