27/5/24

A house with hidden defects? First Aid for Unpleasant Surprises

Every year, thousands of homes are sold, and while many buyers find a new home to be a good investment, some are confronted with hidden defects. Suddenly, the walls may turn out to be damp, or the heating system may not work properly. Worse still, the foundations of the house might be unsuitable. In the following sections, we outline some key guidelines for private buyers and sellers and offer some practical tips.

Imagine you buy a house and sometime later you discover moisture in your kitchen cabinets. To hold the seller liable in such a situation, the law sets out four conditions:

  • There must be a defect.
  • The defect must be hidden.
  • The defect must be serious enough.
  • The defect must exist (or be incipient) at the time of sale

Condition 1: A defect

The first condition is that the purchased property must have a 'defect.' 

Previously, this requirement was strictly interpreted, and there had to be an 'intrinsic' or 'structural' defect, such as a buckling support beam, infestation by dry rot, or the presence of asbestos. 

Nowadays, to provide more protection for the buyer, 'functional' defects are also accepted — defects that prevent the property from being used as intended. Think of the absence of a building permit or contaminated soil. It is important that buyers clearly communicate to sellers what the function of the property should be so that the seller can provide the necessary information.

Condition 2: The defect must be hidden

The defect must be hidden. But when is a defect hidden? This is what lawyers call a 'factual question.' 

The answer depends on the entire situation — the type of defect, the number of visits by the buyers, the status of the seller (e.g., a professional developer?), and so on. 

Judges state that the defect should not be discovered by a normal, elementary but attentive inspection during viewing. If the defect is clearly visible (e.g., woodwork obviously infested with woodworm), judges generally do not accept a hidden defect. The same applies if the defect emits a certain smell detectable during a viewing. 

Also, if the seller informs the buyer about the defect, it is no longer considered hidden. The reverse is also true: if the seller claims that a moisture problem is 'solved' while it is not, there is a hidden defect. 

An example can illustrate the importance of the factual context. Two buyers purchased a house infested with dry rot, only discovering it when the floors were opened. Since the defect only became visible after the floors were opened, the judge accepted it as a hidden defect. Opening floors cannot be expected of a 'normal' buyer. 

In assessing the duty to investigate, judges also consider the nature of the house and the status of the buyer and seller. If the buyer is a private individual, the courts are more likely to accept a hidden defect than if the buyer is a professional (such as a real estate developer). A private buyer is presumed to have less expertise in inspecting the property.

Condition 3: The defect must be serious enough

The seller must ensure that the property is suitable for its intended use. A house is meant for living — a 'use' that is difficult if the heating does not work properly

However, this does not mean that the seller must deliver a 'perfect' house, only one in which the buyer can live normally. 

The precise degree of seriousness remains a factual issue. For example, a moisture problem was not considered serious enough because the house was still habitable. Also, a judge ruled that additional stability works were not a serious enough defect for a building plot.

Condition 4: Existing at the time of ownership transfer

The defect must exist at the time of the transfer of ownership

The seller cannot be held liable for defects caused by the buyer themselves. To protect the buyer, there is a presumption in their favour with normal use.

Price reduction or termination? 

What happens if the buyer faces a hidden defect and meets the legal conditions? 

The buyer has two options. On the one hand, they can terminate the contract. This means the buyer gets the purchase price back (with a possible additional compensation) and the seller becomes the owner of the house again. 

On the other hand, the buyer can choose a price reduction. This can initially be settled amicably. If no agreement is reached, the price reduction will be determined by an expert and later by the judge.

What about an exemption clause? 

The seller can stipulate that they do not need to provide a warranty for hidden defects. However, the seller cannot exempt themselves if they knew about the defect. In that case, the seller must pay compensation. It must be proven that the seller was aware of this. Also, for professional sellers, such an exemption clause is harder to enforce.

Tip 1: Prevention is better than cure

Prevention is always better than cure. Always subject the property to a thorough inspection.

Tip 2: Do not wait too long

Although the tendency to postpone a dispute is understandable, the buyer confronted with a defect should not wait too long. The law requires that the claim be made "within a short period." Importantly, this involves filing a legal action, such as a summons. 

If the buyer immediately informs the seller and then waits five years to summon the seller, the buyer will be too late. 

However, what is a short term?

First, the term starts from the moment the buyer was or could have been aware of the defect. Second, the nature of the defect influences this. For example, a judge accepted that a buyer facing dry rot could file a claim many months after the purchase. The reason: it is difficult to detect dry rot in an early stage. 

Third, buyers' initiatives can extend the term. For example, if buyers promptly appoint an expert, this evidently extends the term. However, once the expert's investigation is complete, buyers must still act promptly.

Tip 3: Engage a legal expert

Hidden defects, especially when it concerns your dream home, can have a serious impact on your peace of mind and that of your family, sometimes even on your health. 

What should you do when you discover a hidden defect?

Vanbelle has extensive experience in real estate law and works with the necessary partners to handle the entire issue, ranging from technical experts, insurers, and other specialists. 

Have you recently bought or sold a house and are confronted with hidden defects? Or has a buyer filed a claim against you? Do not hesitate to contact us.

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