These are transferred by special warranty deed excluding liens, title issues, damage, latent defects and any compliance issue.

In fact, my promise to every buyer was that I would do my best to talk them OUT of each property by exposing every defect I could see. 

It will be around 60 pages and will tell you every defect he found in the house. 

I asked the seller to come down on the price because of these obvious defects, but he wouldn't budge.

If you did and this was not contained in the report, then you have two possibilities:1) If it is something the building inspector should have caught (you will need your contractor / roofer) to provide you with a professional opinion, then it may be deemed an error/omission by your inspector (he has insurance for this);2) If it can be demonstrated that the seller intentionally camouflaged the defect such that the building inspector could not have been expected to discover the issue [remember the inspector is conducting a visual inspection and is not permitted to open walls, etc. ... though they are expected to enter the attic space and examine the underside of the roof], then you "may" have recourse to the seller.

The agent said if the seller pays for it, then I will be fine filing a claim even though I knew about the defect prior to the execution of the policy.

The MLS said it was an 1800sqft 3 bedroom 1 bath home, I had some concerns but my realtor assured me Home Partners would not purchase a defective home and they would correct any material defects with the home!

One LLC.. and a 5 million dollar G L policy that last for 10 years. ( length of our construction defect warranty) very specific to what we are doing and if a worker falls and hurts themselves it would kick in as well. 

Now that it is an identified latent defect, the seller has to disclose it to anyone else looking to buy (therefore, it could be a good bargaining chip for me).

We have a lot of contractor supply auctions here, but you need to know your pricing & there may be a defect somewhere in a pallet of tile or hardwood flooring.My rehab guy picked up a LOT of 12' x 5" base board @ the auction & resold what he didn't need making over $600.