Humber/Ontario Real Estate Course 3 Exam Practice

If a salesperson fails to disclose a latent defect to a buyer, the likely consequence is:

1. The buyer can rescind the contract.

2. The buyer must accept the property as-is.

3. Only the seller is liable for non-disclosure.

4. It would be considered legal but unethical.

5. It requires mediation by the real estate board.

6. It automatically voids the sale agreement.

The correct answer is: The buyer can rescind the contract.

The consequence of a salesperson failing to disclose a latent defect to a buyer is that the buyer can rescind the contract. This is based on the principle that a latent defect is a hidden issue with the property that is not visible during a regular inspection and can significantly affect the property's value or safety. When the salesperson does not disclose such defects, it is considered a breach of their duty to act in good faith and to provide full disclosure of all important information that could influence the buyer's decision. In many jurisdictions, including Ontario, the law allows buyers who have been misled or who have not been informed of critical issues to rescind, or legally cancel, the contract. This provides a level of protection for buyers and reinforces the importance of transparency in real estate transactions. This principle also ties into ethical practices in real estate, where professionals are expected to uphold certain standards, including the obligation to disclose known defects. Failure to do so can lead to liability not only for the seller but also for the salesperson who facilitated the sale, as both are seen as responsible for ensuring that all material facts are presented to the buyer.