Hidden Defects Unravels Property Sale
Tuesday 16 November 2010
A buyer who found major faults in the property they purchased has had the sale quashed.
In a recent decision the French supreme court, the Cour de Cassation, once again confirmed the importance of the ‘vices cachés’ protection offered to property buyers.
This legal principle states that if a buyer later discovers a ‘hidden defect' (vice caché) in the property, of which they were not aware when they bought the property, then they can obtain either annulment of the sale, or damages from the seller.
The clause does not exempt the buyer from the need for an elementary degree of due diligence in the purchase, and so the defect must be one that they could not reasonably have been aware of when they bought the property.
Neither can the defect be a minor one; it must be of such a nature that they would not have bought the property if they had known about it, or would have offered substantially less for it.
Given the importance of this protection, sale contracts for property in France often contain a standard clause that exonerates the seller from hidden defects.
However, in a stack of decisions over the years the courts have ruled that such a clause is only operable if the seller acted in good faith.
The difficulty is often establishing whether a buyer did act in good faith.
Accordingly, our own view is that, unless you know what you are doing, buyers should refuse to accept such a clause in the sale contract.
Case Details
In the case that came before the Cour de Cassation some elements of renovation work carried out at the property failed to conform to proper standards, which the judges considered rendered the property unsuitable for its use.
The staircase that had been installed did not comply with building regulations; the chimney pipes were dangerous, and the electrical works had not been carried out in conformity with the regulations.
Although the sale contract contained a clause stating that the seller gave no guarantee of the absence of hidden defects, the court argued this clause was not operable as the seller had a perfect knowledge of the works that had been carried out. In short, the court considered they had acted in bad faith.
The court ordered that the sale be annulled, and that the seller be required to reimburse the buyer the purchase price of €241,000, as well as €12,508 legal and other expenses incurred in the sale, together with €5000 damages and compensation.
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