If a commercial property has a hidden defect, it can cause several problems for the purchaser. A hidden defect is a flaw or issue with the property that is not visible during an inspection or a condition that the seller did not disclose.
Hidden defects
There are several examples of hidden defects, including structural problems and code violations, environmental issues, and other conditions that can affect the property’s value. Structural issues can include problems with the foundation or uneven walls and environmental contamination could include groundwater pollution and mold.
There can be zoning issues with the property that were not disclosed, which can affect the property’s permitted use and code violations that the property purchaser is not aware of. Sellers can also conceal damage to electrical systems, plumbing issues and other mechanical problems that are not found during an inspection. It can be very expensive to repair or renovate these issues.
Next steps
If the purchaser uncovers a hidden defect, it’s important to document it and review the purchase agreement for how defects are addressed. The seller should be notified in writing and the notification should include supporting documentation. The purchaser may ask the seller to repair the defect or reimburse them for repairs and renovations.
If the purchase agreement allows for mediation, the parties may resolve the dispute without going to court. With mediation, a neutral third party can help the purchaser and seller reach an agreement.
If mediation is not successful or is not an option, the purchaser can request court intervention.