One of the most frequently asked questions after the transfer of ownership of a home is whether a seller can still be held liable for a defect that comes to light only after the transfer. Many people believe that a seller is automatically liable as soon as a defect is discovered, while others believe that a buyer has no recourse whatsoever after the keys are handed over. The reality lies somewhere in between. An important question is not only whether a defect exists, but also whether that defect was apparent to the buyer, what information the seller provided about it, and what agreements the parties made regarding it in the purchase agreement.
Not every defect automatically results in liability
When a defect hinders the normal use of the home, a seller may be liable under certain circumstances. However, this does not mean that a seller is always responsible for every defect discovered after the transfer of ownership. In fact, the so-called “disclosability” issue must also be considered. Was the defect visible or recognizable to the buyer? And did the seller fulfill their duty to disclose information? It is precisely these questions that play a key role in assessing liability.
The Seller’s Duty to Disclose
A seller has a duty to disclose. This means that the seller may not withhold important information about the property that the seller knows or ought to know. As a general rule, a buyer may rely on the accuracy of the seller’s statements regarding the property. The basic principle in case law is therefore that a buyer may rely on the information provided by the seller.
This rule is important because a buyer cannot possibly discover everything during a showing. Therefore, the buyer may assume that the seller is being honest and fully disclosure about relevant matters that are important to the property.
The Buyer’s Duty to Investigate
The seller’s duty to disclose is counterbalanced by the buyer’s duty to investigate. A buyer also has a responsibility and cannot simply sit back and do nothing. However, this duty to investigate does not always come to the forefront immediately.
According to established case law, the first step is to determine whether the seller has fulfilled his duty to disclose. Only once it has been established that the seller did not withhold any information that he was required to provide is it assessed whether the buyer himself conducted sufficient due diligence.
In other words: the question of whether the buyer should have been more careful only arises once the seller has first fulfilled his duty to disclose information.
The duty to disclose takes precedence over the duty to investigate
This may well be the most important rule of thumb to remember.
If the seller has information that he should have disclosed but failed to do so, he cannot, in principle, rely on the buyer’s failure to fulfill his duty to investigate.
Or, to put it more simply: a seller cannot first withhold important information and then tell the buyer that the buyer should have figured it out on their own.
That is precisely why case law has established that the duty to disclose takes precedence over the duty to investigate. First, it is determined whether the seller acted honestly and fully disclosed all relevant information. Only then is it considered whether the buyer should have conducted a more thorough investigation on their own.
An age clause can significantly weaken the buyer’s position
In addition to the seller’s duty to disclose and the buyer’s duty to investigate, there is another provision that can have enormous consequences in practice: the age clause. This clause is regularly included in the purchase agreement, especially for older homes. Many buyers skim over it or view it as standard language, even though the legal consequences can be significant.
In a “standard” purchase agreement, Article 6 typically states that, at the time of the transfer of ownership, the home must possess the actual characteristics necessary for normal use as a residence. This provides the buyer with important protection. If, after the transfer of ownership, the buyer discovers a defect that impairs the normal use of the home, the seller may, under certain circumstances, be held liable.
However, an age clause puts that protection under considerable strain.
With an age clause, the buyer and seller agree that the buyer understands the home is a certain age and that the structural quality, the materials used, and the systems may no longer meet the standards currently required of modern homes. The buyer thereby accepts that certain components may simply be worn out or outdated and that this risk falls largely on the buyer.
That does not mean the seller is automatically off the hook. The duty to disclose still applies. If a seller is aware of a defect that he should have disclosed, he may not withhold that information. If he does, he may still be liable despite a statute of limitations clause.
But in all other cases, the buyer’s position becomes much more difficult. If, for example, it turns out after the transfer of ownership that the sewer system needs to be completely replaced, the electrical system is severely outdated, the wooden floor structure is at the end of its useful life, or the roof is in much worse condition than expected, a buyer with an age clause will find it much harder to argue that the seller is liable for these issues. This is precisely because the buyer has accepted in advance that an older home is simply more likely to have defects and overdue maintenance.
In practical terms, you can think of it this way: Article 6 of the purchase agreement normally provides a buyer with an important warranty that the home is fit for normal use. An age clause does not completely eliminate that guarantee, but it often limits its effect so significantly that a buyer is much less likely to successfully invoke Article 6. For many defects related to the age of the property, this means in practice that the buyer is often left to cover the repair costs themselves after the transfer of ownership.
That doesn’t mean that, as a buyer, you’re automatically “out of luck” as soon as an age clause is included in the purchase agreement. The seller remains obligated to honestly disclose to the buyer any known defects that they were required to report. However, for many other defects that simply result from the age of the home, the risk actually shifts to the buyer. As a result, the protection normally provided by Article 6 is significantly reduced.
That is why it is especially important to have a thorough inspection conducted before purchasing an older home. A structural inspection may cost a few hundred euros, but it can ultimately mean the difference between an unpleasant surprise and a financial loss of tens of thousands of euros. Anyone buying an older home with an age clause would be wise to realize that there is a significantly higher chance that they will be left to foot the bill themselves after the keys are handed over. That is precisely why this clause has such a significant impact on a buyer’s legal position in practice.
Conclusion
Whether a seller is liable for a defect after the transfer of ownership therefore does not depend solely on the existence of that defect. Equally important is whether the defect impairs the normal use of the home, whether it was apparent to the buyer, whether the seller properly fulfilled their duty to disclose, and what agreements the parties made regarding this in the purchase agreement.
The most important lesson can be summarized simply: In principle, a buyer may rely on the information provided by the seller. If the seller has withheld information that he should have disclosed, he generally cannot invoke the buyer’s failure to conduct a sufficient investigation. Only when the seller has fulfilled their duty to disclose does the buyer’s duty to investigate come into play.
If an age clause is also agreed upon, the protection normally provided by Article 6 of the purchase agreement is significantly limited. This does not mean that the seller can never be held liable, but it does mean that a buyer will have much less success in invoking that provision. For many defects related to the age of the home, the buyer will ultimately have to bear the repair costs themselves after the transfer of ownership. That is precisely why it is wise to conduct a thorough inspection before the purchase and not to take the consequences of an age clause lightly.
