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Defects in property

It is uncommon for a purchaser to buy immovable property only to find out, after the sale has been concluded (and in many instances, after transfer), that there is a defect in the property. Often the estate agent who negotiated a contract finds himself in the middle of a dispute between the seller and the purchaser concerning such defects. Most standard form contracts used by estate agents contain clauses regulating the parties’ liability for defects and in many instances the discontent between the parties could have been avoided had the estate agent explained the implications of the clauses to the parties before conclusion of the contract of sale.

The common law position can be summarized as follows:

The seller is liable for any latent defect in the property, which existed at the time of conclusion of the sale, even if he had no knowledge of it. A latent defect is a defect which is not visible or discoverable upon a reasonable inspection of the property and which substantially impairs its utility or effectiveness. Common examples are leaking roofs, dampness, structural defects in the foundations, etc, provided the defect concerned is not clearly visible. The seller is not liable for patent defects, i.e. defects which are clearly visible to any reasonable person inspecting the property.
When a latent defect is present, the buyer can, depending on the circumstances, cancel the contract and/or claim repayment of a portion of the purchase price.

If the seller has made a misrepresentation (i.e. a false statement) about the condition or quality of the property sold, he can be held liable by the purchaser. A misrepresentation can be made expressly or tacitly. For example, if a seller conceals the fact that the swimming pool on the property has a leak, this is a tacit misrepresentation. If he falsely states that the roof does not leak while in fact it does, it is an express misrepresentation. In both cases the purchaser can, depending on the circumstances, set the sale aside, or abide by it and claim a reduction in the price or damages.

Generally, a seller is not liable for any defect which did not exist at the time of conclusion of the sale but which arose thereafter. However, if after conclusion of the sale the seller remains in occupation of the property for a certain period, he must take responsible care of the property. If a defect should arise through his fault (e.g. broken windows) he must have it repaired before giving the purchaser occupation of the property.