What real estate sellers need to know about liability for defects
In Germany, there is a warranty for sellers. "The seller must provide the buyer with the item free of material defects and legal defects." This is stated in Section 433 (1) of the German Civil Code (BGB). A material defect exists, for example, if a house purchased for residential purposes is uninhabitable due to a leaky roof or other defects in the building structure. A legal defect, on the other hand, means that third-party rights make the property uninhabitable for the buyer. This would be the case, for example, if a tenant is granted a right of usufruct in the land register.
What legal consequences can sellers expect?
According to § 437 No. 1 BGB, the buyer is entitled to subsequent performance if defects occur which the seller has concealed from him. This does not apply to obvious defects such as a large hole in the roof. In this case, it is assumed that the buyer noticed this clearly visible damage during the viewing and purchased the property with this knowledge. An exception is made if the seller has provided a guarantee in the purchase agreement—such as the immediate use of the property, which is hardly possible with a hole in the roof—in which case the seller must provide compensation.
In the case of hidden defects in the building fabric, however, the seller must sometimes provide subsequent performance if the defects have existed for some time. In theory, according to § 439 BGB, it is also possible to deliver an identical item as a replacement – however, this is hardly possible in the case of real estate. If the seller neither provides an equivalent item nor remedies the defect, the buyer has the right to withdraw from the purchase contract (Section 440 BGB) or to reduce the purchase price (Section 441 BGB).
How can sellers protect themselves against liability for defects?
Of course, it is not always the case that sellers are aware of defects in their property and deliberately conceal them. So is it impossible to sell without fear of being held liable at a later date? It's not quite as bad as that. Sellers can use certain clauses in the contract to exempt themselves from liability for material defects that arise after the contract has been signed. However, this only applies to defects that were not known to both parties before the contract was signed. If the chimney sweep discovered the defects on the roof before the change of ownership and informed the seller, this can be easily proven in a possible legal dispute.
Concealing known defects is therefore not a wise option. Instead, it is advisable to record them in writing in the purchase agreement to protect yourself from liability at a later date. This is why a professional valuation by an expert is so important. This not only allows owners to find out the real value of their property, but also gives them an overview of all defects in the house that they can list in the purchase agreementin addition, according to § 438 of the German Civil Code (BGB), the buyer's claims in real estate purchases expire after five years. Sellers therefore do not have to worry about being held liable for new damage after several years.
Do you need a professional appraisal for the sale of your property or are you unsure about the wording in the purchase agreement? Contact us now without obligation. We will be happy to assist you. Legal notice: This article does not constitute tax or legal advice in individual cases. Please have the facts of your specific case clarified by a lawyer and/or tax advisor.
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