JRWThere are many terms which might sound quite foreign when you sell or purchase real estate property. For instance, you will often hear the terms “latent defect” and “patent defect”.  For many, this may be the first time you have heard these terms.  So, what do these terms actually mean and how should they impact your decision making when selling or purchasing property?

A “latent defect “is one which a purchaser is unable to reasonably discover upon an inspection of the property.  A “patent defect” is one which a purchaser, who inspects a property with reasonable care, ought to see or discover.

A defect may be either a title or a quality defect.  A defect in title is an interference in the vendor’s ability to perform their obligation to transfer the title under the Contract, being the subject matter of the sale (including the improvements).  A defect in quality affects the quality of the land and/or improvements.  Whilst a defect in quality may affect the value of the land, or the use to which the land or improvements on the land may be put, it does not interfere with the vendor’s ability to transfer the title.  For example, use or zoning of the land, physical defects in the land or improvements (i.e. structural defects, pest infestation, land contamination, etc.).

A vendor is only obliged to disclose to a purchaser latent defects in title.  In respect of all other defects, being patent defects in title and quality, and latent defects in quality, the rule is caveat emptor or “let the buyer beware”.

A vendor’s failure to disclose a latent defect in title may entitle the purchaser to terminate the Contract, if sufficiently serious. Accordingly, it is important that defects are classified correctly.  However, such distinction is not always easy to make.  It may be prudent for a vendor to disclose the defect in the Contract with an acknowledgment by the purchaser that the disclosure has been made.  This not only assists the purchaser with their inspections of the property and decision making, but also provides more certainty to the vendor by limiting the purchaser’s right to object or assert other rights regarding the defect.

You should discuss any potential defects in the property with your solicitor. Feeling overwhelmed by the terminology used in conveyancing transactions?  Contact the friendly and experienced team at Everingham Solomons because, Helping You is Our Business.

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