They have  not even done a title search (which I had done myself before buying and there were no defects), but simply refusing to sell an OTP unless I have a bona fide contract to sell the property.

A tenant can perform self-repairs if the defect is under $300 or one-half of the monthly rent, whichever is higher, and deduct the cost from the rent."

Improper changes can cause defects with enforcement.  

The CAR lease form you're using says "Tenant shall be charged for repair of drain blockages or stoppages, unless caused by defective plumbing parts or tree roots invading sewer lines." 

Only downside would be that as a broker I must disclose what I know about latent and patent defects of any property.

In general, if your Gross Rent Multiplier (GRM)  {the ratio of acquisition cost to monthly rent}  is below 50, then barring something outlandish with the operating costs; structure/integrity of the property; a serious defect in title; or local (re)development plans, the deal should be viable.You will still want to obtain actual financials (2 - 3 years) and perform a full discounted cash flow analysis.  

I pay for an inspector to come and check the house, so I am aware of major defects. 

Or could the home builder cause a defect in the title that we don't know about.   

My definition of a good investor friendly agent is one that can walk the property with you and can point out the major defects.  

A latent defect or an undiscovered senior lien or judgement could be a very costly mistake.