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What is a Latent Defect? Plus: 6 Steps to Take if Your House Has One

CEO Khai Intela
As a new homeowner, it can be incredibly distressing to discover major hidden defects in the house you've just purchased. The shock of realizing that the condition of the property is different from what you...

what is a latent defect

As a new homeowner, it can be incredibly distressing to discover major hidden defects in the house you've just purchased. The shock of realizing that the condition of the property is different from what you expected can leave you feeling angry and deceived by the seller.

Having practiced real estate law in Howard County, MD for over three decades, I have received countless calls from panicked homeowners asking, "What do I do now?" To provide an answer, we first need to determine if the issue at hand qualifies as a latent defect under Maryland real estate law.

Bad Luck... or Latent Defect?

Some of the most common hidden defects discovered after settlement include:

  • Mold
  • Water Damage
  • Termite damage
  • Well & septic issues
  • Electrical issues
  • Roofing issues
  • Plumbing issues
  • Foundation & other structural problems

Why wasn't this problem discovered during my home inspection?

Many people wonder why their home inspector did not detect the problem during the inspection, giving them the opportunity to back out of the contract. The truth is that many of these issues are not obvious to either the buyer or the home inspector before the settlement is completed.

Most buyers hire competent home inspectors who do their best to uncover any hidden defects. Unfortunately, even the most experienced home inspector cannot detect certain issues. Often, these major problems are only discovered by the homeowner later, after living in the house under normal conditions.

For example, let's consider the all-too-common scenario below:

John knows his house has faulty windows because they leak every time it rains. Before putting his house on the market, John repairs all existing water damage and covers up any evidence of water penetration around the windows. Sarah puts in an offer to buy the home with a home inspection contingency. John accepts Sarah's offer.

The home inspection is done on a sunny day, and the home inspector sees no visible signs of window leakage. John and Sarah complete the settlement, and Sarah becomes a first-time homeowner. Two weeks later, there is a major rainstorm while Sarah is out of town for the weekend. The windows leak, causing $7,000 worth of damage to the window sills, drywall, and flooring below.

Definition of Latent Defect in Maryland Real Estate Law

Under Maryland law, a seller of a residential property is legally required to disclose certain prior or current problems with the property being sold, regardless of any disclaimers made. These potential problems are called "latent defects."

According to Maryland law, a "latent defect" is an issue with the property that the seller knows about and meets the following criteria:

  1. Is not visible.
  2. Could not have been reasonably expected to be uncovered by a buyer or home inspector before the purchase.
  3. Could endanger the health or welfare of occupants or visitors to the property.

It is important to note that not all defects in a house are considered latent defects, and the seller must have knowledge of the defect when signing the contract.

In the situation described above, the leaky windows were considered a latent defect. Since John had prior knowledge of the defect before selling the house, he had a legal obligation to disclose that information to Sarah. Failure to do so could result in legal action against John.

What Qualifies as a Latent Defect?

One of the most common problems uncovered by new homeowners is mold. Consider this scenario:

Michael purchases a house that needs cosmetic updates but believes the property has "good bones." After settlement, Michael begins renovations and starts removing the outdated 1960s wood paneling from the basement walls. To his horror, he discovers a major mold infestation lurking behind the paneling.

Sadly, it is not uncommon to find out that the seller was aware of the defect but chose not to disclose it to avoid losing the sale. In this case, the question becomes: Can you prove that the seller had knowledge of the defect before selling you the house?

If the answer is yes, you may have legal recourse against the seller for non-disclosure of a latent defect.

The Law vs. Reality

Even though Maryland real estate law requires the disclosure of latent defects, the reality is that it doesn't always happen. As a result, new homeowners often find themselves facing expensive repair bills, sometimes totaling tens of thousands of dollars or more.

In these situations, it is natural to feel angry and deceived by the seller, as well as worried about affording the necessary repairs. However, it is important to remain calm and follow these steps:

  1. Ensure your family's safety: If you discover potentially dangerous issues such as faulty electrical wiring or mold, prioritize your family's health and vacate the property immediately. Seek professional help to address the problem.
  2. STOP! Do not destroy the evidence: Avoid tearing out, cleaning up, or repairing the problem as it may destroy valuable evidence needed to prove your case.
  3. Immediately document what you see: If the defect does not pose an immediate physical threat, take pictures and videos of the existing conditions before any remediation is done. If the situation is dangerous, have an expert document the situation for you. This evidence may be critical if you decide to pursue legal action against the seller.
  4. Call the experts: Depending on the issue, contact experienced home improvement contractors, mold remediation experts, structural engineers, or other appropriate professionals to evaluate the problem and provide repair estimates. Document everything in writing and obtain multiple estimates.
  5. Contact an attorney: If you've gone through the aforementioned steps and are considering legal action, promptly consult an experienced Maryland real estate attorney to discuss your options and next steps. Time is often of the essence in these matters. Choose an attorney well-versed in Maryland real estate law to effectively handle the case.
  6. Weigh your options: Rather than immediately resorting to suing the seller, evaluate the cost of repairs and the evidence proving their knowledge of the problem. If the repair costs are relatively low, pursuing legal action may not be worth the time, money, or hassle. However, if you're facing significant expenses, seeking damages from the seller may be appropriate.

Legal Process to Recover Damages

If you recently purchased a house only to discover major defects afterward, and you believe the seller was aware of these problems, it may be possible to take legal steps to recover some or all of the expenses you've incurred.

The available options often depend on the terms of the contract of sale used in the transaction. In the Columbia, MD area and beyond, most realtors use the Maryland Association of Realtors Residential Contract of Sale Form. This form contract includes important components, such as a required mediation session, which can be helpful in reaching a resolution without resorting to court, as well as an attorney's fees provision that enables reimbursement for attorney's fees if legal action becomes necessary due to seller fraud.

Coover Law Firm, LLC is Here to Help. Call us Today.

If you've recently discovered major problems with your new home, you are likely under significant financial and emotional stress. At Coover Law Firm, LLC, we have been handling cases like yours for over 30 years and understand what you're going through. The good news is that you don't have to face it alone.

We are here to explain your options and work together to devise a plan. Schedule an initial consultation with experienced Howard County real estate litigator, Fred L. Coover, Esquire, by calling us today at (410) 995-1100. We look forward to serving you!