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What Is a Hidden Defect?

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  • Written By: Mary McMahon
  • Edited By: Shereen Skola
  • Last Modified Date: 03 September 2016
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A hidden defect is a problem with a purchase that would not have been apparent with a detailed and reasonable inspection at the time of sale. The buyer may have legal grounds for a claim against the seller, requesting a refund, replacement, or repair, depending on the nature of the problem. For example, if the title of a property has a hidden defect, the buyer might be able to rescind the deal, while poor home construction might be grounds for repairs by the contractor who performed the work. Depending on regional laws, the seller’s knowledge of the problem may be relevant to the case.

Legally, a person making a purchase has an obligation to inspect it, following any reasonable steps to check for flaws. For example, someone would drive a car before buying it, and would look over the engine, body, and undercarriage for obvious issues. Asking a mechanic to inspect a car is also commonly part of the purchase process. If these precautions don’t uncover any flaws, or do but they are addressed in the contract, the buyer assumes there are no other problems.

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When defects that were clearly present at the time of purchase arise, they are considered hidden or latent. A problem deep inside the engine of the car, for instance, wouldn’t be identifiable without taking the engine apart, which is not part of a reasonable evaluation of a car offered for sale. The buyer in this situation could approach the seller to ask for a refund on the purchase or to request a replacement with a vehicle that does not have any defects. Sellers may also offer repairs; a new car dealer, for instance, might replace an engine to address a hidden defect.

In some localities, the seller needs to be aware of the hidden defect for the buyer to have a claim. If someone sells a home fully aware of the fact that there are problems with buried electrical lines, for example, this is likely a misrepresentation of the home and the buyer would be able to claim damages. Sellers who are not aware of a hidden defect may not be held liable for it in other jurisdictions, under the argument that it is not reasonable to force people to be responsible for something they didn’t know about.

Options for dealing with a hidden defect can vary. Sellers may be willing to resolve the problem privately after the buyer explains the situation. In other cases, it may be necessary to pursue the matter in court to claim damages, in which case buyers may want to weigh the court costs against the likelihood of getting a judgment in their favor.

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