A buyer enters into an Agreement of Purchase and Sale for a residential property. After the agreement is firm, but before closing, the buyer discovers a previously undisclosed major structural defect that was present at the time the agreement was signed. What recourse might the buyer have?

Question: A buyer enters into an Agreement of Purchase and Sale for a residential property. After the agreement is firm, but before closing, the buyer discovers a previously undisclosed major structural defect that was present at the time the agreement was signed. What recourse might the buyer have?

Answer options: ✅ The buyer may have grounds to rescind the agreement or seek damages, as this constitutes a latent defect known to the seller.

• The buyer is bound by the 'caveat emptor' principle and has no recourse.
• The buyer can demand the seller fix the defect before closing, or walk away from the deal without penalty.
• The buyer must proceed with the purchase but can sue the local municipality for failing to identify the defect.

Correct answer: The buyer may have grounds to rescind the agreement or seek damages, as this constitutes a latent defect known to the seller.

Explanation: While 'caveat emptor' generally applies, a seller is obligated to disclose known latent defects that render the property dangerous or uninhabitable, or that they have fraudulently concealed. Failure to do so can lead to rescission of the agreement or a claim for damages by the buyer, as established by common law principles.