Latent defect
Encyclopedia
In the law of the sale of property
(both real estate
and personal property
or chattels) a latent defect is a fault in the property that could not have been discovered by a reasonably thorough inspection before the sale.
The general law of the sale of property is caveat emptor
(let the buyer beware) and buyers are under a general duty to inspect their purchase before taking possession. However, it is understood at law that inspection is not often sufficient to detect certain deficiencies in the product that can only be discovered through destructive testing or other means that a seller could not reasonably be expected to allow under normal conditions. For example, wood beams and interior brickwork often cannot be fully assessed without destructive testing, and it would be unreasonable for the seller to allow the buyer to take apart a car's engine.
As such, the law expects that buyers will protect themselves in the sales contract
against defects they cannot possibly be expected to assess prior to purchase. As such, the term "latent defect" is often used as part of the guarantee clauses in a sales contract so that the buyer can recover damages from the seller if defects turn up in the property after the sale. For example, the seller may be required to pay for repairs of any such damage.
There is no automatic right for a buyer to claim against a seller for such latent defects when they are discovered, absent an agreement in contract. However, if a latent defect is discovered, there is often a presumption against the seller when a claim is made in misrepresentation that the seller knew about the latent defect. As such, the seller is required to show that he or she could not possibly have known of the defect, rather than the buyer having to show that the seller did know about the defect. However, if it can be shown the seller could not have known about the defect (and was not wilfully blind
to the possibility) then the buyer's claim will not succeed.
However, when the defect could have been discovered by the buyer by a thorough inspection (a "patent defect"), the buyer cannot possibly succeed in a claim against the seller unless the seller actively took steps to hide the defect from a normal inspection.
In all cases, where a seller actively misrepresents
the condition of the property, such as by taking steps to make an inspection impossible or by lying about problems when directly asked, the buyer will almost always succeed unless it can be shown that the buyer was independently aware of the defect and completed the transaction nevertheless.
Property
Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...
(both real estate
Real estate
In general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...
and personal property
Personal property
Personal property, roughly speaking, is private property that is moveable, as opposed to real property or real estate. In the common law systems personal property may also be called chattels or personalty. In the civil law systems personal property is often called movable property or movables - any...
or chattels) a latent defect is a fault in the property that could not have been discovered by a reasonably thorough inspection before the sale.
The general law of the sale of property is caveat emptor
Caveat emptor
Caveat emptor is Latin for "Let the buyer beware". Generally, caveat emptor is the property law doctrine that controls the sale of real property after the date of closing.- Explanation :...
(let the buyer beware) and buyers are under a general duty to inspect their purchase before taking possession. However, it is understood at law that inspection is not often sufficient to detect certain deficiencies in the product that can only be discovered through destructive testing or other means that a seller could not reasonably be expected to allow under normal conditions. For example, wood beams and interior brickwork often cannot be fully assessed without destructive testing, and it would be unreasonable for the seller to allow the buyer to take apart a car's engine.
As such, the law expects that buyers will protect themselves in the sales contract
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
against defects they cannot possibly be expected to assess prior to purchase. As such, the term "latent defect" is often used as part of the guarantee clauses in a sales contract so that the buyer can recover damages from the seller if defects turn up in the property after the sale. For example, the seller may be required to pay for repairs of any such damage.
There is no automatic right for a buyer to claim against a seller for such latent defects when they are discovered, absent an agreement in contract. However, if a latent defect is discovered, there is often a presumption against the seller when a claim is made in misrepresentation that the seller knew about the latent defect. As such, the seller is required to show that he or she could not possibly have known of the defect, rather than the buyer having to show that the seller did know about the defect. However, if it can be shown the seller could not have known about the defect (and was not wilfully blind
Willful blindness
Willful blindness is a term used in law to when an individual seeks to avoid civil or criminal liability for a wrongful act by intentionally putting himself in a position where he will be unaware of facts which would render him liable.For example, in a number of cases,...
to the possibility) then the buyer's claim will not succeed.
However, when the defect could have been discovered by the buyer by a thorough inspection (a "patent defect"), the buyer cannot possibly succeed in a claim against the seller unless the seller actively took steps to hide the defect from a normal inspection.
In all cases, where a seller actively misrepresents
Misrepresentation
Misrepresentation is a contract law concept. It means a false statement of fact made by one party to another party, which has the effect of inducing that party into the contract. For example, under certain circumstances, false statements or promises made by a seller of goods regarding the quality...
the condition of the property, such as by taking steps to make an inspection impossible or by lying about problems when directly asked, the buyer will almost always succeed unless it can be shown that the buyer was independently aware of the defect and completed the transaction nevertheless.
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