Many people know that the doctrine caveat emptor, which means “let the buyer beware,” is applicable to real estate transactions. This means that, for the most part, it is the purchaser’s responsibility to identify any issues with a given property by having it properly inspected and inquiring about the condition of the property/structure that they are buying. However, the seller is also obliged to disclose certain hazards and problems, and should issue a Property Disclosure Statement when selling any property.
Seller Disclosure Obligations
It is the buyer’s responsibility to conduct a thorough inspection and make reasonable inquiries regarding the home, but the seller is also obligated to disclose a reasonable amount in terms of the condition of the home. The courts can intervene if the seller does any of the following:
- Is aware of a defect in the home that renders it unfit for habitation and fails to disclose this.
- Fraudulently conceals or misrepresents the condition of the home.
- Fails to disclose hazards that render the home dangerous.
If a buyer has reason to believe that a seller was aware of the poor condition of the home and intentionally did not disclose this, the buyer has a right to get the courts involved. Sellers should always provide buyers with a Property Disclosure Statement (PDS) which outlines all issues or concerns with the building and/or property, to the best of the seller’s knowledge. Creating a PDS is not mandatory, but it is highly recommended because it offers protection to the seller from accusations of misrepresentation and is considered part of real estate buying and selling best practices.
Patent vs. Latent Defects
Types of defects are organized into being either “patent” or “latent.” Patent defects are those that are discoverable and, often, visible through a relatively casual inspection of the premise. These are the defects that are the responsibility of the purchaser to discover and identify and do not necessarily have to be disclosed by the seller.
Latent defects are defects that are not evident from a basic inspection and that render the premise dangerous or uninhabitable. It is the seller’s responsibility to identify any latent defects and disclose them to the purchaser before completing the transaction.
Protecting Yourself in Real Estate Transactions
Whether you are a buyer or a seller, it is important to understand the legal ins and outs of any real estate transaction that you take part in. Our lawyers have experience working with both sellers accused of misrepresentation and buyers who are seeking compensation for a real estate transaction where latent defects were not properly disclosed to them. Get in touch today for a legal consultation to help you discover the best next steps for your case.