Does a termite infestation constitute a latent defect for which the buyer is entitled to compensation?
It is likely that a significant termite infestation would constitute a latent defect. The buyer is likely to be entitled to relief if the seller had knowledge of the defect and did not disclose it to the seller.
The doctrine of patent and latent defects governs whether one is able to seek relief for a termite infestation after closing. A patent defect is one that is obvious upon reasonable inspection. A buyer cannot later seek relief for such a defect because it can be easily identified, and is governed by the principle of caveat emptor, buyer beware. Moreover, the seller cannot intentionally conceal things that would otherwise be a patent defect.
A latent defect is hidden and cannot be observed upon normal inspection. It is incumbent on the buyer to first prove that the termite infestation is a latent defect. Second, that the seller had knowledge, actively concealed, or misrepresent the defect. Third, that the defect makes the home uninhabitable, unfit for the buyers intended use, or dangerous.
In cases where vendors were aware of the termite infestation, and misrepresented the latent defect , purchasers were entitled to damages. It was ruled that vendors have a duty to disclose matters of quality and fitness. Knowledge or concealment of a latent defect can serve as an exception to the caveat emptor principle. Furthermore, silence can amount to fraudulent misrepresentation.
Whether a termite infestation constitutes a latent defect is determined on a factual basis. Knowledge of the problem is critical. The law presumes that latent defects are unknown to both buyers and sellers. If a vendor knows of a latent defect they have a duty to candid disclosure, otherwise the purchaser may be entitled to relief.