Disclosing latent defects in real estate -- are local sex offenders included?

"Absent fraud, mistake or misrepresentation, a purchaser takes existing property as he finds it, whether it be dilapidated, bug infested or otherwise uninhabitable or deficient in expected amenities, unless he protects himself by contract terms".

Bora Laskin in the Law Society of Upper Canada's Special Lectures on the Sale of Land (1960)

The case (widely reported in the media - see http://natpo.st/lTpGB5 ) of a couple who sued a vendor who sold them a house next door to someone convicted of possessing child pornography raises the question of what has to be disclosed by a vendor of real estate.

Generally, as described by Bora Laskin (above) a purchaser of real estate buys the property 'as is'. If the purchaser wants a warranty that a property is, say, free of a bat infestation, the purchaser needs to contract for that warranty.

But sometimes a vendor is obliged to disclose a fact about the real estate even if not asked and no term in the agreement of purchase and sale requires disclosure.

A patent defect need not be disclosed but a latent defect - if material - needs to be disclosed if known.

A patent defect is clear, apparent, observable and not hidden from view.

A latent defect is not readily apparent and can only be determined with some degree of investigation.

A material fact is something "important"; "... a fact that would affect a reasonable person's decision to acquire or dispose of..." an interest in property.

A vendor of real estate does not have to mention patent defects, because they should be obvious to all. Any concealment of a patent defect, say painting over otherwise obvious water stains, requires disclosure by the vendor. Some courts have interpreted the failure to disclose as a fraudulent activity and actionable.

Vendors do have an obligation to disclose material latent defects.

Does the convicted sex offender next door amount to a latent defect? My sense is 'no'. The concept of latent and patent defects in real estate law relates to the property itself and its attributes -- not to the surrounding neighbours.

This is especially so as the nature of neighbours is variable -- if we say a convicted sex offender need be disclosed, what about a thuggish drunk whose wild parties disturb the neighbourhood every weekend? Or the person with dementia who loses her temper and yells at people in her confusion and distress?

I can see arguments to the contrary but my sense is that disclosure of latent defects should be limited to physical attributes of real estate.