A buyer in BC waives subjects and the contract becomes firm. The buyer later discovers a significant latent defect the seller knew about but did not disclose. What remedies may be available?

Q: What is the correct answer to: A buyer in BC waives subjects and the contract becomes firm. The buyer later discovers a significant latent defect the seller knew about but did not disclose. What remedies may be available?

The correct answer is The buyer may pursue rescission of the contract or damages for fraudulent or negligent misrepresentation, as the seller's duty to disclose known latent defects survives the removal of subjects. Option B is correct because the seller's legal duty to disclose known latent defects that render the property dangerous or unfit for habitation is an obligation that survives subject removal and even closing. If the seller knowingly concealed a material latent defect, the buyer may pursue rescission (undoing the sale) or damages based on fraudulent or negligent misrepresentation, regardless of when subjects were removed.

Q: What background knowledge is needed for this Residential Trading question?

In BC, the seller's duty to disclose known latent defects is rooted in common law and equity. Key cases have established that this duty cannot be contracted away and survives: subject removal, closing, and title transfer. If the seller knew about a latent defect and failed to disclose it, the buyer may seek: rescission (returning the parties to pre-contract positions), damages for the cost of repair and diminution in value, and potentially punitive damages for fraudulent concealment. The buyer must typically prove the seller had actual knowledge of the defect.

Q: What is a good way to remember the answer to this Residential Trading question?

Remember 'Disclosure Duty Survives Everything' — the seller's obligation to disclose known latent defects survives subject removal, closing, and title transfer. Concealment has consequences. When the exam asks about buyer remedies after subject removal, recall 'Survives Everything' — subject removal does not extinguish the buyer's rights if the seller concealed a known latent defect.

Q: What exam tip applies to this Residential Trading question?

This is a frequently tested principle. The correct answer always states that the buyer retains remedies (rescission or damages) despite having removed subjects. The seller's concealment creates ongoing liability.

Q: How does this Residential Trading concept apply in real world practice?

A buyer purchases a home in Coquitlam and removes all subjects after a satisfactory inspection. Six months after closing, they discover extensive hidden mould behind bathroom walls that the seller had previously attempted to remediate and concealed. The buyer's lawyer sends a demand letter to the seller, who refuses to pay. The buyer sues for damages including remediation costs ($45,000) and diminution in value, arguing the seller's concealment constitutes fraudulent misrepresentation.

Question

Residential TradingBCMEDIUM

A buyer in BC waives subjects and the contract becomes firm. The buyer later discovers a significant latent defect the seller knew about but did not disclose. What remedies may be available?

Answer Options

A

None — once subjects are removed, the buyer has no recourse

B

The buyer may pursue rescission of the contract or damages for fraudulent or negligent misrepresentation, as the seller's duty to disclose known latent defects survives the removal of subjects

C

The buyer can only claim against the home inspector

D

The buyer must renegotiate with the seller's agent directly