Latent and Patent Defects in Homes

Dated: 02/13/2019

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With very few exceptions, all home sales in California are “as-is.” In fact, Paragraph 11(i)(a) of the California Residential Purchase Agreement, the form Realtors use to sell property, states “Unless otherwise agreed in writing: the Property is sold “AS-IS” in its PRESENT physical condition as of the date of Acceptance…” (capitalizations in original). The purchase agreement does give the buyer the opportunity to inspect the property, and requires the seller to disclose all known issues in the property. However, the vast majority of sellers are not responsible for disclosing unknown latent defects in the home. Buyers often ask me what, exactly, is a latent defect.

Patent Defects

In order to understand latent defects, it is first necessary to understand patent defects. Patent defects in the home are those defects that are obvious to any observer. Cosmetic issues are a common type of patent defect. For example, cracks in the driveway or nail holes in the walls are examples of patent defects. A buyer can walk through a home and see the patent defects and know that they are there. Although patent defects are often unsightly, they often do not pose any significant issue to the home and may be a simple fix.

Latent Defects

Latent defects, by contrast, are not easily visible. Latent defects can include faulty or outdated wiring throughout the house, a cracked foundation, or mold behind the drywall. The important distinction is that a buyer walking through the property will not be able to see these defects and may purchase the home without knowing about any of these issues. Unlike patent defects, however, latent defects can pose very serious problems to a new home buyer.

Latent Defects and Home Purchases

Under ordinary circumstances, sellers of goods provide warranties (implied or expressed) about the quality of the goods they sell. However, because home purchases are “as-is,” the seller is absolved of warranting anything about the condition of the property.* In California, sellers do have the obligation to disclose any known defects to the property, including latent defects. Thus, if the seller knows there is a cracked foundation, the seller must disclose that fact. However, if the seller does not know, the buyer will purchase the property without knowing about the defect and will likely be stuck with having to sell the property or fix the problem.

Disclosures

Disclosures, as mentioned in this article, can protect a buyer against latent defects in the home. Disclosures are an important part of the home purchase, and agents and buyers should actually read through them, particularly the Transfer Disclosure Statement, in which the seller discloses all known issues with the property. The transfer disclosure statement is a useful way of finding out about latent defects, including issues such as airplane noise during the Miramar Airshow, noxious smells, or other issues with the property that affect the home’s desirability. Sellers must disclose any material fact that would affect a buyer’s desire to purchase the home.

Home Inspections

Home inspections are another easy way to discover latent defects in the home. Home inspectors have additional tools and experience to discover latent defects in the home. Home inspectors can also recommend supplementary inspections for issues that are beyond the inspector’s scope of practice. Based on the issues found in the home inspection, the buyer can request credits, a price reduction, or cancel the contract depending on the issues in the home.

Patent defects and latent defects are important terms to know and understand when purchasing a home. While patent defects are easy to see, latent defects are hidden and hard to see. Latent defects are one of the biggest risks associated with buying a home. Disclosures and home inspections are cost effective, easy ways to protect yourself against these types of defects. In addition, a savvy agent will be able to point out specific factors you should consider before purchasing a house.


* One important exception to this is when a buyer purchases a home directly from a builder or a flipper. Because these individuals hold themselves out as professional sellers of property, they generally provide certain expressed and implied warranties.

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