Limitation of (exemption from) the seller’s liability for latent defects of a real property being sold
In one of our previous articles (Liability and claims for latent defects of real properties and complaints concerning latent defects), we have presented the issues relating to the term ‘latent defect of real property’, periods of time for making complaints for latent defects to the seller and the buyer’s claims from defects.
In this article, we will focus mainly on the (im)possibility of limitation of or exemption from the seller’s liability for latent defects of real property being sold to the buyer.
Generally, pursuant to Section 2129 (2), the buyer must notify the seller of a defect of a structure fixed to or in the ground with a solid foundation within 5 years from the buyer’s acquisition of ownership right, otherwise the court will not recognize the buyer’s claim from defective performance, provided that the seller raises an objection of the statute of limitation. Although there is only a ‘structure fixed to or in the ground with a solid foundation’ mentioned in this provision of the Civil Code, the provision is, according to legal professionals, applicable to apartments and non-residential premises as well. For the sake of completeness, the period of time when it is possible to make a complaint of latent defects of lands is 2 years
The above-mentioned shows that the buyer may, with the absolute limitations period of 5 years from the acquisition of ownership right to the real estate by the buyer, turn to the seller, requesting, among other things, a discount from the purchase price of the real property.
Pursuant to the established case law, the amount of discount is to be determined according to the nature and extent of defect in respect to the agreed purchase price of real property, price of repairs, reduction of the aesthetic value of the real property and similar criteria. If the defect is irremovable and precludes from using the real property, the buyer may even withdraw from the purchase agreement and request a refund of the purchase price in full.
For 5 years from the transfer of real property, the seller is in fact kept in suspense as to whether the buyer will be claiming a financial amount from him as a discount from the purchase price for a latent defect of the real property, or not.
As the seller’s liability for defects is a no-fault liability, it does not matter whether the seller knew about the latent defect or not.
There are following possibilities to limit or exempt the seller from liability for defects:
- The seller expressly notifies the buyer, in the purchase agreement or otherwise, of the specific defects of the real property (e.g. by means of a technical report which the seller had prepared before sale and which is attached as annex to the purchase agreement).
- The buyer expressly waives in writing, in the purchase agreement or otherwise, his claim from defective performance in the sense of Section 1916 of the Civil Code.
Finally, please note that according to the case law, provisions like ‘buyer buys the real property as is’ or ‘buyer has made himself familiar with the technical condition of the real property’ or any similar provisions included in the purchase agreement do not exempt the seller from liability for latent defects, unless the buyer expressly consented to it. Sellers often mistakenly believe that these provisions exempt them from liability for latent defects, and buyers are often not aware that even if these provisions have been included in the purchase agreement, they can still make a claim for latent defects of the real property, including but not limited to claiming a discount from the purchase price.
If you are currently considering selling your property, we will be happy to regulate your liability for latent defects in the purchase agreement. And if you are currently buying a real property, we will be happy to assess the seller’s extent of liability for defects provided by the purchase agreement presented to you by the seller. Last but not least, we will be happy to draft any purchase agreement for you and assist you in the enforcement of your claims from (not only) latent defects of real properties.
You can contact us at email@example.com or call 224 498 345-6, we are ready to help in any situation.
Mgr. Lenka Slámová, attorney-at-law
Pajerová Sedláčková ADVOKÁTKY s.r.o.
10 February 2022