Seller Disclosure in Ontario: Latent vs Patent Defects

What a seller has to disclose in Ontario

Ontario still runs on caveat emptor. Buyer beware. A seller does not have to walk you through every crack in the driveway, every noisy neighbour, or every quirk that might bother you after you move in.

The exception is a known latent defect that makes the property dangerous, potentially dangerous, or unfit to live in. The seller also cannot hide a problem, and cannot lie if you ask a direct question.

A Toronto real estate lawyer will still search title. That search does not catch a hidden leak. It flags what is on the register.

That is the whole map. Patent versus latent tells you what has to be volunteered. Stigma tells you what usually does not. The agreement of purchase and sale is where you put the facts that actually matter to you, instead of hoping someone offers them.

Patent vs latent defects

Canadian common law splits property problems into two piles. The label controls whether the seller has to say anything.

Patent defects

A patent defect is one a buyer or a home inspector can find by reasonable observation and ordinary inquiry. Visible roof damage. A cracked foundation wall you can see from the yard. A broken window. A slope in the floor that shows up on a walk-through.

The seller generally does not have to point those out. You are expected to look, and to keep an inspection condition in the offer if you need time to look properly. Concealing a patent defect is different. Paint over a stain, or cover a crack so nobody can see it, and buyer beware may stop applying.

Latent defects

A latent defect is hidden. A person exercising reasonable care on a viewing, even with an inspector, would not ordinarily find it. Think contamination behind drywall, a failed foundation that only shows up after finishes come off, or wiring that is a fire hazard and is not visible on a standard inspection.

Not every hidden flaw is a latent defect the seller must disclose. The defect generally has to make the home dangerous, potentially dangerous, or unfit for habitation. Unfit does not always mean you cannot sleep there. A court can look at more than whether someone is currently living in the house.

Which latent defects must a seller disclose

The Ontario Court of Appeal set the modern starting point in McGrath v. MacLean (1979). A seller can be liable after closing if they knew of a latent defect that made the premises unfit for habitation, or if they concealed it, or if they were reckless about the truth of what they said.

Knowledge is the usual fight. The buyer has to prove the seller knew, or was willfully blind. A repair the seller reasonably believed was finished is not the same as a known, ongoing defect. A seller who builds a wall over a cracked foundation, or dries a leak before the walk-through so nobody sees it, is in a different category.

RECO tells agents the same split in Bulletin 7.4. Patent defects sit with the buyer. Latent defects that make the property unfit, dangerous, or potentially dangerous must be disclosed. The seller's agent's job, if they know that fact, is to disclose it to every interested buyer and try to get a written acknowledgement.

Examples that often land in the disclosable pile, when the seller knows about them and they still affect safety or habitability:

• Active or unremediated grow-op contamination, including mould and unsafe wiring left behind
• A structural or foundation failure that has been covered rather than repaired
• Hidden water infiltration that is still a problem, not a finished repair the seller reasonably believed was done
• A known fire, electrical, or contamination hazard that a viewing will not show

A grow-op is not automatically "stigma." If it left the house dangerous, it is usually treated as a defect. If it was fully remediated to the local health or building authority's requirements, RECO lists that history as a stigma example, not as a current latent defect. Either way, a seller who is asked cannot lie, and a buyer who cares should put a warranty in Schedule A.

Stigma is not a defect

Stigma is not a crack in the foundation. RECO Bulletin 7.5 describes it as a non-physical attribute that might bother a particular buyer: a death in the home, a haunting rumour, a notorious former owner, a remediated grow-op. What one buyer cannot live with, another buyer does not care about.

Ontario courts have not treated those facts as making a house unfit or dangerous. In 1784773 Ontario Inc. v. K-W Labour Association Inc. (2013), an allegation that a property was haunted was not a latent defect. A murder, a suicide, or a death from natural causes is generally the same analysis. The seller does not have a free-standing duty to volunteer it.

Silence is not a licence to mislead. If a buyer asks, the seller cannot lie. If the seller puts a warranty in the agreement (no unnatural death, no grow-op during their ownership) and that warranty is false, that is a misrepresentation problem, not a stigma debate.

Condo buyers sometimes mix this up with the status certificate. The certificate is the corporation's disclosure about the building: reserve fund, lawsuits, rules. It is not a biography of the unit. Seller disclosure about the suite still follows the same patent, latent, and stigma rules.

The Seller Property Information Statement

The Seller Property Information Statement (SPIS, OREA Form 220) is optional. Ontario law does not require a residential seller to complete one. Listing it can make a buyer more comfortable. It can also turn every checkbox into a representation.

If the form is wrong, or incomplete in a way that misleads, the seller can face a misrepresentation claim they would not have had if they had said nothing and simply disclosed the latent defects the common law already requires. Many sellers, on advice, decline the form and answer specific written questions instead, or put the facts in Schedule A where everyone can see them.

An agent's TRESA duties are not the same as the seller's common-law duty. Completing an SPIS does not replace either one. It is not a shield.

What happens if a seller stays silent

If the seller knew of a dangerous or uninhabitable latent defect and did not disclose it, or hid it, the buyer may claim damages after closing. In a serious case, the buyer may try to undo the deal. Proving what the seller knew is usually the hard part.

An "as-is" remark on MLS is not a legal shield. Residential property in Ontario is already sold as-is unless the purchase agreement says otherwise. The listing is not the contract. A seller who conceals a known dangerous latent defect does not get a pass because the MLS remarks said as-is.

The limitation clock is in the Limitations Act, 2002. You generally have two years from the day you discovered the defect, or the day you ought to have discovered it with reasonable diligence. There is also a 15-year ultimate period from the act or omission the claim is based on. Closing day is not automatically the start date.

What buyers should actually do

Do not treat disclosure as the inspection. A seller only has to volunteer a narrow class of known, hidden, dangerous problems. Everything else is on you.

• Keep a home inspection condition unless you have a reason to go firm without one.
• Ask specific questions in writing if something matters to you: grow-op, death, flooding, an illegal basement, an oil tank.
• Put the answers in Schedule A as representations and warranties. If it matters, it belongs in the agreement.
• Do not expect a title search or title insurance to catch physical defects. Title work finds what is on title. It does not open walls.

A real estate lawyer reviews the agreement before it is firm, including the disclosure and warranty clauses. That review sits in the ordinary closing process. The goal is not to turn every deal into a risk audit. The goal is to write down the facts you actually care about.

Frequently Asked Questions (FAQ)