Real Estate Litigation and Latent Defects: Exceptions to Caveat Emptor

The legal maxim of caveat emptor, roughly translated as “buyer beware”, is a well-entrenched principle of Ontario real property law. According to this general principle, a buyer of land assumes the cost of any defects in the land she buys and cannot sue the seller for damages relating to most defects in land.

Although Caveat emptor represents the general rule in real estate transactions, there are some exceptions. These exceptions include:

(a)   where a buyer purchases a building that is under construction directly from the builder;

(b)   where a defect in the land breaches the seller’s express obligations under a written contract;

(c)   the seller expressly misrepresents to the buyer that the property is free of a defect when he or she knows or ought to know that the defect in fact exists at the property;

(d)   the seller actively conceals a defect so that the buyer does not discover it; and

(e)   the seller fails to disclose the existence of a hidden defect (known as a “latent defect”), known to the seller, which renders the property dangerous or unfit for habitation.

If one or more of these exceptions to the caveat emptor principle apply, the buyer of defective land may be entitled to damages from the seller in relation to the defects in the land.

Latent defects

Sellers of land have a duty to disclose to the buyers any latent (i.e. hidden) defects in the land which render the land dangerous or unfit for habitation. A defect is latent if it is not readily apparent to someone exercising reasonable care in an inspection of the land. Whether a latent defect is dangerous or renders land uninhabitable requires an assessment of the defect itself and its impact on the property and persons occupying the property. Examples of dangerous latent defects recognized by Ontario courts include serious termite infestations, radioactivity, mould and construction work which violates the Ontario Building Code.

The lawyers at James Lawyers are experienced in representing clients in lawsuits involving dangerous or costly defects in land. If you require legal advice with respect to an issue involving a defect in land, please contact our firm to schedule a legal consultation.

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