Used car buyers get more consumer protection than resale home buyers. When you buy a used car you can check whether there are liens registered against the vehicle, or whether the car has required major repairs following an accident. The vehicle then has to pass a safety check before the registration can be transferred.
Resale home buyers aren’t so lucky. There is virtually nothing to protect a buyer who discovers a hidden defect after closing, whether it’s a leaking pipe, mould or a serious foundation problem. Click here to view the full article.
A thorough home inspection will uncover readily evident or “patent” defects in a house, and a homebuyer can then make a rational decision about whether to buy the house and at what price. However, home inspectors cannot see behind walls and ceilings, and will therefore miss hidden or “latent” defects in the home. The seller of the home is not obligated to inform the buyer of such defects, even if he knows about them, unless the defects are so serious as to affect the safety or “fitness for habitation” of the property. The majority of these latent defects relate to the foundations, especially leaky basements; these defects can be very costly to fix but are rarely unsafe. So, it’s a bit of a crap-shoot for the homebuyer, and every so often he will inherit an expensive problem for which there is little recourse. The writer of this article is suggesting that government-mandated “latent defect insurance” could protect the homebuyer, but I doubt that this would be workable. As my home inspector friends are fond of reminding me, virtually any basement will leak under the right conditions, and sometimes it’s the homeowner’s fault that this happens (for example if eavestroughs aren’t cleaned out regularly). Latent defect insurance would be an underwriter’s nightmare!