A couple who purchased a property in France in which they later discovered dry rot have successfully sued the seller for compensation.

In France, a seller is obliged to bring to the attention of the seller any 'hidden defects' (vices-caches) in the property. If they fail to do so, and the defect is discovered after the sale has taken place, a court can rule that compensation be paid or that the sale be annulled.

In order for a hidden defect to be accepted as such in law, three main tests are used:

• The defect must not be apparent to the buyer;
• The problem must be sufficiently important that is it renders the property unsuitable for its proper use or that it diminishes significantly this use, such that the buyer would not have purchased it, or purchased on the same terms, had they known about it;
• The defect must have been present prior to the sale.

There is a huge amount of case law concerning the application and interpretation of these principles.

However, the courts have determined that certain defects are more self-evidently 'hidden' defects, such as defective foundations, termite infestation, flooding risk, and an unstable structure, provided of course they have not otherwise been brought to the attention of the buyer, for which the seller would need to provide suitable proof.

In a case recently heard in the French Supreme Court, the Cour de Cassation, a couple who discovered dry rot (mérule) in their property sued the seller and the estate agent for damages.

The court of appeal condemned the seller to pay the purchaser the sum of €40,800.

The court took the view that the dry rot was a hidden defect, and not something that could be apparent to the buyer, despite the poor condition of parts of the property.

The sellers argued to the court that any reasonable buyer who adopted a vigilant approach to the purchase of a property would could themselves have established the presence of dry rot, and on this basis it was not a hidden defect.

This argument was not accepted by the court, who stated the certain technical tests would have been necessary for a buyer who was not a building professional to have confirmed the presence of dry rot, and that the traces of humidity in the property did not necessarily imply, for someone who was not a building professional, that the property had dry rot.

In addition, the seller of the property, himself a builder, had undertaken some renovation works to the property, and could not therefore have been unaware of the presence of dry rot.

The independent expert appointed by the court stated that the skirting boards were 20% contaminated with dry rot.

On this basis the court refused to apply the clause in the sale contract exonerating the seller from hidden defects on the grounds that such a clause could not be used if the defect was known to the seller and they did not inform the buyer.

The court adopted the same position for the estate agent, but whom they exonerated from any responsibility. The court ruled that, if the presence of dry rot could only have been confirmed by a specialist survey, the estate agent, who was not a building professional, could not be expected to have known it was present.

Last year the 'Loi Alur' introduced a compulsory survey for dry rot as part of the sale process, but due to the technical difficulties of such tests it was abandoned. However, the seller has an obligation of information to the buyer concerning the presence of dry rot and other major defects.