For sellers’ agents, the classification of a defect as patent, latent, or materially latent gives rise to distinct disclosure obligations that they should understand in order to manage risk and ensure compliance.

This article provides a practical overview of these distinctions and offers guidance on how and when disclosure should be made to potential buyers.

Patent Defects

Patent defects are discoverable through a reasonable inspection of a property by a qualified person. Examples could include discolouration and staining on structural elements such as columns, deteriorated shingles on a roof, improper plumbing or wiring, or inadequate window sealing that is reasonably visible. With a patent defect, neither the seller nor the seller’s agent is obligated to disclose it to the buyer.

In British Columbia, buyers bear the risk in discovering any patent defects and the BC Court of Appeal has confirmed that the concept of caveat emptor (buyer beware) “remains very much alive” (Nixon v. MacIver, 2016 BCCA 8).

Latent Defects

Latent defects – which are defects that are not discoverable through a reasonable inspection by a qualified person – must be disclosed by a seller if known to them and if they render the property dangerous or uninhabitable. Examples of a latent defect could include structural or mould issues within walls, or foundation problems that are not visible.

The common law (i.e. judge-made law) obligation on sellers to disclose known latent defects that render a property dangerous or uninhabitable exists regardless of whether a seller elects to complete a Property Disclosure Statement (“PDS”) or Property No-Disclosure Statement (“PNDS”).

Material Latent Defects

Material latent defects are a more frequently misunderstood classification but are critically important for sellers’ agents to understand because, unless a seller has already provided written disclosure, a seller’s agent must disclose to a buyer any material latent defect they are aware of. The obligation to disclose material latent defects comes from the Real Estate Services Rules (the “RES Rules”) and applies to all licensees.

KEY: the definition of “material latent defect” in the RES Rules is broader than the definition of “latent defect” found in the common law and in the PDS. Not only does this term include defects affecting safety or habitability, it also includes defects that involve significant repair costs, municipal notices, and a lack of appropriate permits.

Licensees should carefully review section 59 of the RES Rules which defines “material latent defect” as a material defect that cannot be discerned through a reasonable inspection of the property, including any of the following:

1. a defect that renders the real estate
   1. dangerous or potentially dangerous to the occupants,
   2. unfit for habitation, or
   3. unfit for the purpose for which a party is acquiring it, if
      1. the party has made that purpose known to the licensee, or
      2. the licensee has otherwise become aware of that purpose;
2. a defect that would involve great expense to remedy;
3. a circumstance that affects the real estate in respect of which a local government or other local authority has given a notice to the client or the licensee, indicating that the circumstance must or should be remedied; or
4. a lack of appropriate municipal building and other permits respecting the real estate.

(the “Statutory Disclosure”)

Thus, situations may arise where a seller’s agent has an obligation to disclose a defect under the RES Rules, while a seller does not have any such obligation under the common law. For example, a property with undisclosed zoning restrictions might be considered to have a material latent defect under the RES Rules (even though such zoning restrictions do not render the property dangerous or uninhabitable) and, if known, such restrictions should be disclosed by the seller’s agent.

In practical terms, a licensee should disclose known material latent defects:

• promptly, and to all other parties to the transaction, and before any agreement of purchase and sale is entered into; and
• in writing, preferably using the REALTORS^® Disclosure of Material Latent Defects form.

If a seller’s agent is aware of a material latent defect, they should seek instructions from their client to disclose it, unless the seller has already provided written disclosure. If a seller client instructs a licensee not to disclose a material latent defect, that licensee is in a conflict, and should refuse to provide further services.

KEY: Ultimately, whether a defect is patent, latent, or materially latent is a judgment call. For further guidance, licensees should speak with their managing broker, consider seeking legal advice, and consider advising the seller to obtain independent legal advice. When in doubt, err on the side of disclosure with the seller’s instructions.

Property Disclosure Statements (PDS) and Property No-Disclosure Statements (PNDS)

A PDS is often the only document in which a seller makes representations to the buyer about the state of their property. In a PDS, a seller is asked to answer “Yes”, “No”, “Do Not Know” or “Does Not Apply” to the following question:

“Are you aware of any latent defect in respect of the Premises?

For the purposes of this question, “latent defect” means a defect that cannot be discerned through a reasonable inspection of the Premises that renders the Premises: (a) dangerous or potentially dangerous to occupants, or (b) unfit for habitation.”

A PDS includes a definition of “latent defect” for sellers that is generally consistent with the common law, but is less stringent than the Statutory Disclosure. Licensees must therefore be sure to review the Statutory Disclosure to ensure their own compliance with the RES Rules. It is also prudent for licensees to assist sellers to understand the PDS and their disclosure obligations in respect of latent defects. If a seller is uncertain about the scope of their disclosure obligations, licensees should recommend independent legal advice.

PDS and PNDS — Key Considerations

First, if a seller decides not to complete a PDS, or completes a PNDS, this does not relieve the seller of their obligation to disclose known latent defects that render the property dangerous or uninhabitable at common law. This also does not relieve the licensee from their obligation to disclose known material latent defects under the RES Rules. 

Second, licensees should be mindful of their advice regarding the PDS and PNDS. In a recent British Columbia Court of Appeal decision with profound implications for the real estate industry, Sewell v. Abadian, 2025 BCCA 158 [Sewell], the Court of Appeal found that a seller was aware of unpermitted additions to his property at the time of selling it. However, he had drawn a diagonal line through the PDS (crossed it out), did not fill out any of the boxes, and wrote in the comments section “Tenanted Property, Owner has never occupied”.

The Court found that a struck-through PDS along with its comments amounted to a representation that the seller was unaware of any unpermitted additions, and in light of the seller’s awareness of unpermitted additions, was a misrepresentation.

In Sewell, the Court clearly identified that “crossing out” a PDS could lead to confusion. In response to Sewell, the BCREA revised the standard form PDS in July 2025 which now states, in part:

“…Disclosure is the preferred approach to support transparency and reduce the risk of post-closing disputes. Sellers are advised that partial, incomplete or non-responses on this form may still give rise to legal liability…If you intend not to make any disclosures about the Property, do not complete this form. Instead, speak with your Realtor about using the Property No-Disclosure Statement Form [PNDS]…”

The PNDS – which the BCREA released in 2025 – is a straightforward form that states:

“In lieu of a detailed Property Disclosure Statement, the Seller is not making any representations or warranties about the Property. The Seller is aware of their obligation to disclose any known latent defects.”

Where a seller does not wish to make any representations regarding the property, sellers’ agents should consider advising their clients to complete the PNDS and avoid the practice of striking through a PDS.

Key Takeaways for Understanding Defects and Disclosure

• Understanding the distinction between patent, latent, and material latent defects is critical because each engages different disclosure obligations for licensees and for their clients.
  • Patent defects – remain the buyers’ responsibility under caveat emptor (“buyer beware”); sellers generally have no duty to disclose them.
  • Known latent defects – must be disclosed by a seller where they render a property dangerous or uninhabitable, regardless of whether a PDS or PNDS is completed.
  • Material latent defects – under the RES Rules are broader than common law latent defects, and licensees should be mindful that they may have disclosure obligations even where sellers do not.
• Disclosure of known material latent defects must be prompt, written, made before entering into any agreement of purchase and sale, and should preferably be made using the REALTORS^® Disclosure of Material Latent Defects form.
• PDS and PNDS forms do not eliminate disclosure obligations, and incomplete or inaccurate disclosure can give rise to liability.
• When in doubt, the safest course is to seek instructions from the seller, recommend legal advice where appropriate, and err on the side of disclosure.