- A material latent defect is one that cannot be discerned through a reasonable inspection, and it includes unsafe conditions, very costly defects and missing permits.
- A licensee acting for a seller must disclose known material latent defects to all other parties to the trade, promptly and before any agreement is entered into.
- A defect already disclosed to the buyer in writing by the seller need not be disclosed again by the licensee.
Sellers often hear that they must disclose hidden defects but not obvious ones. That is a useful starting point, but the line between the two is not always clear, and BC's rules define the hidden category quite specifically.
This article explains patent and latent defects in plain words, what the BC rules say about the latent kind, and how to reduce the risk of a claim after closing. It is general information, not advice on a particular home.
This article covers the law of British Columbia.
Patent and latent: the basic difference
A patent defect is one that is plain to see, such as a visibly cracked window, a stained ceiling or a sagging fence. A latent defect is hidden, such as a leak inside a wall or a problem under the floor. In simple terms, the question is whether a buyer could reasonably have found it by looking.
BC's rules use this idea in a formal way. A material latent defect is a material defect that cannot be discerned through a reasonable inspection of the property. What counts as reasonable inspection in a given case depends on the facts.
What counts as a material latent defect
The Real Estate Services Rules say a material latent defect includes the following:
| Type | What the rules say |
|---|---|
| Safety | A defect that makes the real estate dangerous or potentially dangerous to occupants, or unfit for habitation |
| Cost | A defect that would involve great expense to remedy |
| Government notice | A circumstance for which a local government has given notice that it must be remedied |
| Permits | A lack of appropriate municipal building and other permits |
Notice that missing permits are listed. A renovation that looks fine can still raise a disclosure issue if the paperwork was never obtained.
Your disclosure duty and the licensee's
A licensee acting for a seller must promptly, and before any agreement is entered into, disclose known material latent defects to all other parties to the trade. The word known matters, because the duty is tied to what is actually known.
If you instruct your licensee not to disclose such a defect, the licensee must refuse to provide further trading services to you for that trade. If the buyer has already received written disclosure of the defect from you, the licensee need not disclose it again to that party.
The licensee rule is framed around latent defects. Whether you have separate obligations or risks regarding obvious defects, or about statements you make, depends on the facts and is worth confirming with a lawyer.
Claims after closing
If a buyer later finds a hidden problem, a dispute may turn on whether the defect was known, whether it was latent, and what was said or hidden. Time limits apply. A court proceeding generally must not be started more than 2 years after the claim is discovered. There is also an ultimate limit of 15 years, but if the defendant wilfully conceals the claim or misleads the claimant, the act or omission is treated as occurring on the discovery date.
- Conceal nothing that you know is serious. Concealment can extend the time a buyer has to claim.
- Keep dated copies of what you disclosed and to whom.
- A loss on the sale of a home is not deductible, because a home is personal-use property. How a repair cost or a claim affects your own finances depends on your situation, so it is worth confirming with an accountant or lawyer.
What to do next
- Walk through the home and list anything unusual: past leaks, odours, cracks, drainage issues or unapproved work.
- Pull permit records for renovations and ask the city or regional district about open permits or notices.
- Consider a pre-listing inspection to learn what a buyer might find, then decide how to deal with each item.
- Put known issues in writing for the buyer before an agreement is made.
- Have a lawyer review the contract and your disclosures if the property has a complicated history.
Frequently asked questions
Do I have to disclose a defect the buyer can see?
The licensee rule applies to known material latent defects, meaning those not discernible through a reasonable inspection. Obvious defects are treated differently in the rule, but other duties can still arise, so ask a lawyer about your facts.
Are missing permits a latent defect?
A lack of appropriate municipal building and other permits is included in the definition of a material latent defect. A licensee acting for you who knows of it must disclose it to all other parties to the trade, promptly and before any agreement is entered into. The licensee need not disclose it to a party who has already received written disclosure of it from you.
What if I do not know about the defect?
The licensee duty is to disclose known material latent defects. What counts as knowledge in a dispute depends on the evidence, so keep records and speak to a lawyer if a claim arises.
Can I give the buyer the information myself?
Yes, and written disclosure from the selling client means the licensee need not disclose that defect again to that party. Keep proof of what you provided and when.
Sources
- Real Estate Services Rules, B.C. Reg. 209/2021 (BC Laws) — bclaws.gov.bc.ca
- Limitation Act (BC Laws) — bclaws.gov.bc.ca
- Canada Revenue Agency - Principal residence and other real estate — canada.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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