If a buyer discovers a significant defect after purchasing a property that they were not previously informed about, but that the seller knew or should have known about, this is a hidden defect. This means that the seller should have informed the buyer, but did not. To avoid later disputes, it is fair and reasonable to openly communicate all known defects to the buyer and also record them in the purchase and sale agreement.
Hidden deficiencies can be related to legal, technical or environmental issues, which often overlap.
- Legal shortcomings include incomplete documentation, unpaid utility bills, a loan taken out by the apartment association that increases monthly costs, or, for example, heritage conservation restrictions.
- Technical shortcomings There may be construction defects, depreciated utility systems, or other structural problems.
- Environmental deficiencies These could include, for example, spring floods, noise and pollution from a nearby manufacturing facility, or a neighbor who is constantly disturbing the peace.
While legal and technical deficiencies can usually be resolved, this often requires additional costs and time. Environmental deficiencies, however, may not be possible to eliminate at all.
According to the law, the seller is liable for defects in real estate if:
✔ The deficiency already existed at the time of transfer of the property.
✔ The shortage has not arisen due to the actions of the buyer.
✔ The buyer did not know and should not have known about the defect.
✔ The buyer shall notify the seller of the defect within a reasonable time after its discovery.
✔ The seller's liability exclusion for the defect has not been agreed upon or is not legal.
✔ The defect is due to the seller's intentional act or gross negligence.
✔ The seller knew about the defect but did not inform the buyer.
The seller is obliged to inform the buyer of all known defects, which may also be reflected in the price of the property. It is also important to know that the seller's liability for hidden defects lasts up to two years after the conclusion of the sales transaction. If the buyer discovers a significant defect during this period, he can demand that the seller eliminate the defect or compensate for the costs. In extreme cases, the buyer can initiate legal proceedings to cancel the sales transaction and claim a refund.