Latent Defect

A latent defect on real property refers to hidden defects (usually structural) that are not discoverable even when reasonable care has been carried out for inspection.

A good example is foundational problems with a house.

A seller might not be aware that such a problem exists and a buyer might not be able to discover it before purchasing the house. This can lead to considerable repair costs in future, and even become a safety hazard.

Sellers who have knowledge of latent defects must disclose them to prospective buyers when prompted so that they know what they are getting into and what to expect.

If a real estate agent or home seller is aware of such defects and choose to hide this material information from a buyer, then the buyer can later take legal action to make claims against the seller citing misrepresentation and even rescind the deal.

Buyers responsibility

While sale of property is often on a caveat emptor basis, meaning that the buyer is responsible for inspecting the condition of a house before purchase, there are certain things that are just impossible to discover.

This can also be termed as buying the house “as is”.

Especially when latent defects concern material information that might potentially put the safety of the buyer at risks, it is only right and proper that sellers are obligated to disclose them.

In contrast, patent defects are damages and defects that a reasonable home inspection should discover such as cracked walls and broken windows.

Sellers have no obligation to bring a buyer’s attention to these things as they are fully expected to find them when inspecting the condition of the property.

If a house is sitting on compromised foundation, at least in good faith, sellers should inform buyers of the potential risks and repair expenses.

With the laws concerning latent defects in Singapore, sellers are not legally obligated to voluntarily reveal these information to prospective buyers.

But if a buyer questions a seller about a particular issue and the seller lies about it, then there is misrepresentation and the seller can be held accountable later.

This means that a prudent buyer who is afraid of being on the end of a bad deal might want to list down questions to ask the seller just to have his back covered.

A seller wouldn’t be able to say that questions about an issue was never asked.

In Singapore, the sales contract ultimate describes the nature of agreement between buyer and seller. It is where any disputes would start and end with.

As this is the case, buyers can also protect themselves by inserting clauses that offer a little protection against latent defects.

For example, one can insert a term stipulating that the seller has to pay for half the repair costs if foundational problems are discovered within 6 months.

However, whether a seller accepts these terms and provisions is another matter altogether.

At least if the list of due diligence questions were asked in the first place, and there was misrepresentation, the buyer can still take legal action against the seller.

Newly built homes

With newly built homes such as new launch condominiums and town houses, developers and contractors often offer a guarantee period in which latent defects are covered.

This give prospective buyers more confidence in purchasing highly priced houses and apartments.

For example, a developer would require a handing over and taking over inspection of the property before the premises is officially handed over to the new owners of the property. While inspections conducted by new owners would focus on patent defects, there is usually a guarantee provided for latent defects that remain undiscovered by the new owners.

These guarantee periods can run from anywhere between 1 to 5 years.

So do check with the developer sale office if this is a matter that concerns you.

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