What is a Material Latent Defect in BC real estate?

Direct answer

A defect a reasonable inspection would not find, and one nobody can contract out of: in BC the listing agent must disclose it, whatever the seller wants. Section 59 of the Real Estate Services Rules defines it and sets the duty. The definition has one requirement, that the defect is material and cannot be discerned on a reasonable inspection, and then gives six examples of what counts. The list is open, not closed: the Rules say INCLUDING any of the following. They are a defect that makes the property dangerous or potentially dangerous to occupants; one that makes it unfit for habitation; one that makes it unfit for the purpose a party has made known to the licensee, or that the licensee has otherwise learned; a defect that would involve great expense to remedy; a circumstance a local government has given notice must or should be remedied; and a lack of appropriate municipal building and other permits. That last one deserves its own sentence, because it catches ordinary Lower Mainland houses rather than disasters: an unpermitted suite, a deck or a garage conversion is a material latent defect by regulation, not a matter of opinion. The duty is the LICENSEE's, not the seller's. It runs to every other party to the trade, including an unrepresented buyer and the agent on the other side, and it has to be met before any agreement is entered into. If a seller instructs their agent to keep quiet, Real Estate Services Rules section 59(3) does not merely let the agent disclose anyway: the agent must refuse to act for that seller on that sale at all. The one exception is Real Estate Services Rules section 59(4), where the party has already had written disclosure of the same defect from the seller.