Duty to disclose defects: The seller has a duty to disclose known material defects that are not readily observable. What makes a defect material?

• A. Duty to disclose all known material defects not readily observable
• B. A disclaimer always bars liability
• C. It only applies to commercial builders
• D. The seller has no duty to disclose defects

Answer: (A)

Material defects are issues that would affect a reasonable buyer’s decision or the property's value. The seller’s duty to disclose applies when the seller knows about defects that are not readily observable. That combination—knowledge and latent nature—defines what must be disclosed. If a defect is obvious upon inspection, the buyer could discover it, so there’s no duty to disclose. Disclaimers don’t automatically shield a seller from liability for known latent defects, and the duty isn’t limited to commercial builders or any single type of seller.