Apr 18

Liability for Latent Defects of Properties and Complaints Concerning Latent Defects

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What is a latent defect:
A latent defect of property is such defect which was in existence already at the time when the buyer took over the property, but it was not discovered until later, it means it was not visible at the time of purchase and it manifested itself only after a time, with the use of the property. A mold on walls covered behind plasterboards or cracks in floor covered by a floating floor are just two examples of latent defects.

What is the course of action if you discover a latent defect:
If the buyer discovers a latent defect of the property, the buyer must notify the seller of such defect without undue delay. The buyer’s notification obligation is provided by Section 2112(1) of Act No. 89/2012 Coll., the Civil Code (the “Civil Code”). Such notification should be definitely made in writing and it should be delivered at least by a registered mail (best with acknowledgment of receipt). The without-undue-delay period is judged in each case individually, depending on the particular circumstances, such as in the case that the buyer had the property assessed by an expert before notifying the defect to the seller etc.

Until when must the buyer notify of a latent defect:
In accordance with the provisions of Section 2129(1) of the Civil Code, the deadline by which the buyer must notify of a latent defect is 5 years from the buyer’s acquisition of ownership title to the property. If the buyer makes such notification after the set deadline, the court shall not, in the case of dispute, grant them the right from a defective performance if the seller invokes late notification of the defect.

Buyer’s claims:
In the event that the buyer notifies the seller of a latent defect in time, the buyer is also obliged to prove that the defect of the property has all characteristics of a latent defect, including but not limited to the fact that the defect existed already at the time when the buyer took over the property.
The buyer’s claims from a latent defect are provided by Section 2103 of the Civil Code. If the defect is removable, the buyer has the right to request from the seller that the seller removes such latent defect or provides a reasonable reduction of the purchase price. If the latent defect is not removable, the buyer has the right to request from the seller a reasonable reduction of the purchase price or they may withdraw from the purchase agreement and thus, request refund of the whole purchase price.

Exclusion of seller’s liability for latent defects pursuant to Section 2113 of the Civil Code
The seller is liable for latent defects of property also in the case that the purchase agreement contains provisions such as “the buyer accepts the property as is“, “before signature of this agreement, the buyer made itself familiar with the condition of the property“ etc. The seller is not free from the liability for defects even if they prove they did not know about the latent defect themselves, as this is an objective liability.

Guaranteed liability
The seller’s liability for latent defects may not be mistaken for liability for defects under guarantee which is usually two or three years and which must be expressly agreed between the seller and the buyer. The guarantee covers a broad range of defects, including but not limited to defects which will only occur in the property after a time, as based on the provided contractual guarantee, the seller guarantees to the buyer that the property will retain the characteristics it had at the time of purchase for a certain period of time and that the condition will not get impaired.