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Latent Defects: Get the Facts..

By
Real Estate Agent with RealWorks Residential Brokerage

A Latent Defect is one that is not discoverable by an ordinary inspection. A common example is exterior insulation finish system (EIFS) which is a type of stucco finish that has been linked to water damage in leakage.

If there is a defect in said stucco, the buyers are within their right to withdraw or adjust their offer, baring that it was not disclosed.

Thats why Realtors should motivate their sellers to disclose the possibility of this damage to potential buyers in order to fully protect each party.

An interesting way to discover latent defects is to check reports for the property to see if an insurance claim had been filed within the last 3-5 years.

 

Conversely, Buyers agents are encourage to disclose any information to the otherside about the buyers ability to close under the circumstances of discovery of specific defects.

 

I hope this was helpful and have a great Sunday everyone!

Sean Railton
Park City Realty Group - Park City, UT

We have a lot of stucco in my market place which is failing.  I ran into an insurance agent who will run the house for insurance claims when we put it under contract which is a nice way of checking up on the disclosures supplied by owners.

Nov 27, 2010 10:53 AM
Margo Currie
Exit 1 Stop Realty - Saint Augustine Beach, FL

This is helpful... thanks. There are so many possible things that could be defective, how can we possibly warn buyers or check on all of them?

Nov 27, 2010 10:53 AM
Richard Willard
Asset Realty Group - Bellevue, WA
Richard Delane Willard

Checking on the house insurance claims history would only produce a report showing a claim if the seller had actually noticed the effect of the latent defect.  If it truly is latent, and the seller is oblivious to the hidden damages that are accruing, then the inspection process is where the defect will be revealed or not. That's when the quality of the inspector's experience will make the difference to the process, or not!  I have a house being inspected today with some EIFS, and real stucco on the walls.  The EIFS is only around the windows and extruded elements of the house details.  All the walls are actual Portland cement stucco, applied over the wire mesh.  Hope it turns out alright! 

Nov 27, 2010 10:57 AM