We have all been there.  The day after a closing, you get a call from your client claiming that there is a defect at the property and wanting to know their rights. To understand what happens next, it is worthwhile revisiting the law of latent defects.

Generally, the law of real estate purchases is that of Caveat Emptor – buyer beware.   There are exceptions to Caveat Emptor as the case of Gesner v. Ernest makes clear.  That case set out a three-fold test that allowed a Buyer to go after a Seller for damages. 

1.       The defect had to have been known to a Seller; and

2.       The defect was not previously disclosed to the Buyer; and

3.       The defect was not apparent on reasonable inspection.

So, in order to make a claim in Court against the Seller, the Buyer has to establish that the defect was latent – not visible on reasonable inspection – that the Buyer was not informed of the defect and that the Seller had knowledge of the defect.     It is that latter point that always proves the kicker.  How do you prove that the Seller had knowledge?  It is a high bar to pass and accordingly, pursuing damages after closing is often a challenging thing to secure.  

The Bottom Line: It is difficult to secure damages for defects found post-closing but possible if certain conditions are met.


Written by: Mark Morris, B.A., LL.B., M.B.A

Written by: Mark Morris, B.A., LL.B., M.B.A