What does a latent defect refer to in real estate transactions?

A latent defect in real estate transactions refers specifically to issues within a property that are not readily observable at the time of inspection and typically become apparent only after the buyer has taken possession. This definition encompasses defects that could significantly affect the value or use of the property, and importantly, the seller may not have disclosed these defects intentionally.

Options that describe visible damage or minor cosmetic issues do not meet the criteria of a latent defect because they are apparent and can usually be seen during a property inspection. Legal disputes over boundaries are also unrelated to latent defects since they pertain to legal issues rather than physical conditions of the property. Thus, the correct identification of a latent defect as a hidden issue that surfaces after purchase highlights its critical role in protecting buyers in real estate transactions.