Marketing91

  • HOME
  • Marketing Concepts
    • Marketing
      • Retail Tutorials
      • Market Research
      • Customer Management
    • Strategy
    • Management
    • Advertising
    • Branding
    • Business
    • Finance
    • Sales
    • Career Guidance
  • Digital Concepts
    • Blogging
    • Search Engine Optimization
    • Social Media Marketing
    • Facebook Marketing
    • Internet Marketing
    • Ecommerce
  • Brands
    • Marketing Mix of Brands
    • SWOT analysis of Brands
    • Brands Strategy Analysis
    • Business Models
    • Brand Competitors
    • TOP 10
  • Courses
Home » Marketing » Latent Defect: Meaning, Understanding, Remedies, Concept and Examples

Latent Defect: Meaning, Understanding, Remedies, Concept and Examples

October 18, 2019 By Hitesh Bhasin Tagged With: Marketing

A latent defect is defined as a fault that existed but was not discovered before the sale took place. This is a flaw that was not spotted during the initial and superficial inspection process.

Table of Contents

  • Meaning of latent defect
  • Understanding latent defect
  • Latent defect remedies for the buyer
  • Latent defect remedies for the seller
  • Latent defect in real estate
  • Example of a latent defect in real estate
  • Latent defect in industrial products
  • Latent defect insurance

Meaning of latent defect

A latent defect is known as a hidden defect that is normally not discovered during a general inspection. The imperfection, failure, or malfunction can be either in material, workmanship, or a product.

It is a common issue that most buyers face once they start living in the property. Be observant if you are purchasing something because the seller is not required to help you in finding defects.

Understanding latent defect

Understanding latent defect

Latent defect means a shortcoming that is not discovered at the appropriate time. It is used in different sectors and fields like insurance, construction, software, and real estate. Whether the seller was aware of the flaw or blemish cannot be proved because he can claim his ignorance quite easily.

This is why it has become vital to include a clause in your contract, referring to the latent defect. This will help you to gain the upper hand in a situation that can go either way at a later point.

There are several instances where a clause relating to latent defect has proved a boon for the buyer and saved him from the clutches of the seller.

Latent defect remedies for the buyer

  • A buyer will have to give concrete evidence that the defect existed before the sales deal was signed and it has not occurred after he has taken residence in the property
  • If the buyer has not placed a clause related to a latent defect in his contract or if he does not have latent defect insurance he will not be liable for any repairing costs
  • If the buyer can prove that the flaw is dangerous and poses a risk, he can ask for a price reduction or return the property
  • The important thing about a latent defect is that all the rules are applicable within the first year of the sale

Latent defect remedies for the seller

Latent defect remedies for the seller

  • The seller is not duty-bound to report any damages of faults or defects until and unless it can cause some serious harm
  • It is the buyer who should find the faults and act before signing the deal
  • If the buyer has evidence that the seller knew about the defects the court can order him to compensate the buyer for repairing work
  • If the defects are of immense proportion, the seller can ask the court to be excluded from the liability of the payment

Latent defect in real estate

In real estate, it is described as a defect found in the property that was not found during the preliminary inspection and was discovered after signing the deal.

The concept of a latent defect in real estate includes factors like-

  • A latent defect in real estate deal includes plumbing issues like faulty pipes, depression on the floor, or a leak in the roof.
  • Ideally, an inspection is carried out during a property deal, and if there are defects, then the deal will have to incorporate changes accordingly. If the seller is not ready to make them the deal falls through.
  • The faults and flaws are big enough that they can be detected easily. Sometimes though they do not make their presence felt and are later on termed as latent defects
  • As the damage is discovered after signing the deal, the buyer cannot hold the seller accountable for the latent defect. Although the buyer can claim that the seller had prior knowledge of the defects, it becomes impossible to sue and prove it in the court of law due to lack of evidence
  • If a clause is introduced in the contract prior to the deal, the buyer can claim compensation for the defect and have it repaired to his satisfaction.
  • When a buyer includes the clause of a latent defect in construction contract he can hold him responsible and thus secure the required amount to repair the defect like cracks on the ceiling, flooring, and walls that were not noticed earlier on. It is important to be diligent and make repairs as soon as possible because they can widen further and can cause more damage later on.
  • A leak in roofs, wiring issues, plumbing, water leakage are some issues that generally start popping up once you shift base and start living in the place.

Example of a latent defect in real estate

real estate

Shyam has recently purchased a house at one crore rupees. He sent an employee Ram to go through the house and inspect it thoroughly for any flaws. Except for one or two minor ones, Ram could not find faults with the house and reported them.

The deal was signed, and after a few weeks, a new team was sent to the house for estimation about the new renovations. There was a carpet on the floor, and when it was wrapped up, you could see cracks in the flooring. When they removed the wardrobe from the wall, you could see cracks over there.

Shyam could not do anything about it as he had not included the clause related to a latent defect in his contract. He had to bear the cost of repairing himself as the seller refused to compensate him for the flaws.

Latent defect in industrial products

In industrial products, latent defect is known as a latent material defect, and the concept can be explained with the help of the following facts-

  • The latent defect occurs when a hidden flaw or defect in material or item exists but is not found until it has been purchased and perhaps used
  • The buyer can make a claim that the seller knew about the flaw
  • If it is discovered during the warranty period you can get a replacement product, and if not then the seller is not liable for the defect nor will he pay after the date has expired
  • The seller is not in any way obliged for the compensation money or replaced product unless it contains ingredients that can prove harmful pr dangerous to the buyer.

Latent defect insurance

latent defect

Latent defect insurance is a means of recovering the price that you will need for repairing the defects. The concept includes facts like

  • The latent defect insurance is created to help the buyer if he finds any fault in working, design, and manufacturing of a product
  • It covers the amount of repairing unnoticed damages on the property. It is applicable only when there is a serious chance of greater damage because of that flaw
  • The latent defect insurance extends up to a particular sum after which you cannot claim for compensation
  • The insurer appoints a surveyor to inspect the defects and to supervise the repairing. He gives a certificate of completion
  • You can claim insurance only for the first twelve years of the life of a property
  • The latent defect insurance is reliable and offers a helping hand in the time of need.

Share this post:

Share on Facebook Share on Twitter Share on LinkedIn Share on Email Share on WhatsApp
Digiaide Marketing and Digital Marketing Courses

Related posts:

  1. Wholesaling Definition – Meaning, Importance, Functions and Types
  2. What is Triple Net Lease? Meaning, Examples, Characteristics and Risk
  3. Buyer Remorse – Meaning, Reasons and Prevention
  4. What is Product Development? Definition, Meaning, Phases
  5. What is Product Launch – Examples, Types, Advantages
  6. What is Product Quality? 7 Steps of Product Quality Management
  7. What is Product Strategy? How to develop a product strategy?
  8. Buyer Readiness State – Different Stages Of Buyer Readiness
  9. Customer perceived value, CPV
  10. Product Leadership – Definition, Strategy & Responsibilities

What Do You Want To Learn About? (Start Here)

  1. Marketing Hub
  2. Management Hub
  3. Marketing Strategy
  4. Advertising Hub
  5. Branding Hub
  6. Market Research
  7. Small Business Marketing
  8. Sales and Selling
  9. Marketing Careers
  10. Customer Management
  11. Top 10 Lists
  1. Internet Marketing
  2. Blogging
  3. Search Engine optimization
  4. E-commerce
  5. Facebook Marketing
  6. Social Media Marketing
  7. Business Model of Brands
  8. Marketing Mix of Brands
  9. Brand Competitors
  10. Strategy of Brands
  11. SWOT of Brands
GET DAILY MARKETING UPDATES

About Hitesh Bhasin

I love writing about the latest in marketing & advertising. I am a serial entrepreneur & I created Marketing91 because I wanted my readers to stay ahead in this hectic business world.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Advertisement
Recent Posts
  • Collaboration – Definition, Importance, Types and skills
  • College vs University – Differences, Types, Pros and Cons
  • Common Stock – Definition, Classification and Examples
  • Common Market – Definition, History and Examples
  • Commodity Futures – Definition, Example and Risks
Advertisement

Marketing91

MORE INFO

  • About Marketing91
  • Privacy Policy
  • Cookie Policy
  • Disclaimer
  • Terms of Use
  • Advertise
  • Contact us
  • Sitemap
  • ISO 9001:2015 Certified

LEARNING SERIES

  • What is Communications
  • Types of Communication

WE WRITE ON

  • Marketing
  • Small Business
  • Management
  • Internet Marketing
[email protected]

Copyright © 2022 Marketing91 All Rights Reserved