A material latent defect is “one that makes the property dangerous to live in, unfit for habitation, or otherwise significantly impairs its use” — a hidden problem a reasonable inspection would not catch, and one of the few things a seller has an actual duty to volunteer.
Ontario runs on caveat emptor — buyer beware — a seller has no general duty to volunteer everything they know, and the burden sits with the buyer to inspect. A latent defect is “a hidden problem with a property that is not discoverable by a reasonable inspection”, distinct from a patent defect, which is. Three exceptions override caveat emptor: a “known [latent] defect that makes the home dangerous or unfit to live in” where the seller has actual knowledge; active concealment — the article's own example is painting over water damage before a showing; and a false statement, including on a Seller Property Information Statement where one is given. An as-is clause protects a seller against patent defects but not against these three — “a seller who knows about a serious latent defect and stays silent isn't protected just because the agreement says ‘as is.’”
Whether a repaired problem is still a live latent defect turns on the repair, not the history. On basement flooding specifically: if the cause “was properly identified and fixed, and there's been no recurrence, many sellers and their lawyers view this as resolved history rather than a current latent defect.” But if “repairs addressed only the visible symptoms… without fixing the underlying source, or if the cause was never determined… this looks much more like an undisclosed, ongoing latent defect” — and cosmetic patching used to hide the evidence can itself amount to active concealment.
Two basements flooded years apart. In the first, a cracked foundation was located, repaired by a licensed contractor, and there has been no recurrence in three years — treated as resolved history, nothing to disclose. In the second, the owner repainted the drywall after each flood without ever finding the source, and the flooding has come back twice. The second is a live material latent defect the seller must disclose; the cosmetic repaint, done with the intent to hide the staining before showings, is itself active concealment on top of the non-disclosure.
See also: Patent defect, Grow-op disclosure, Limitation period on a claim.
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