If I buy used real estate and discover a defect, what are my remedies?
There is a general principle in real estate law, stemming from the Latin phrase “Caveat Emptor
”, which holds that a buyer has an obligation to exercise proper caution when acquiring real estate. If there is a defect with respect to the real estate, but the buyer fails to exercise caution and is ignorant to the defect, there is no one to blame other than the buyer. A buyer can take steps to exercise caution by,
- hiring a qualified inspector; and
- building protections in the Agreement of Purchase and Sale by having the seller make certain promises and/or representations regarding the property.
There are exceptions to the Caveat Emptor principle, but it will depend on the context and the type of defect. Broadly speaking, there are two types of defects:
- Patent defects are those that can be uncovered by a reasonable inspection of the property. For instance, missing tiles on the main floor or a large hole on the wall will be evident if an inspection of the property is conducted and these would likely be patent defects. A buyer should not expect to recover any costs associated with remedying a patent defect.
- Latent defects are those that are not readily apparent and cannot be uncovered by someone exercising reasonable care in an inspection of the property. A seller may be liable to the buyer, if the seller knew about a latent defect and either failed to disclose it or actively concealed it. For instance, a seller risks being liable to the buyer if there is a leaking oil tank that is completely underground that the seller is aware of but fails to inform the buyer about.
As a buyer, based on the foregoing, it is important to make sure the Agreement of Purchase and Sale is well drafted and provides you with adequate rights and protections.