Hidden flaws
It is unfortunately common for so-called "hidden defects" to come to light after the purchase of a home or commercial property. For example, the new owners may discover that the basement of the new home is flooded at the slightest rainfall or that the foundation of the purchased commercial property appears to have seriously subsided. As the new owner, you naturally wish to sue the selling party for compensation for the damage suffered due to the hidden defects. Unfortunately, this is not always possible. In this blog I discuss the chances of success of this claim based on the legal rules.
What should a buyer expect?
A disappointed buyer can invoke Article 7:17 of the Civil Code ("BW"). According to this article, a delivered good must conform to the purchase agreement. A delivered good does not comply with the agreement if it does not meet expectations. What a buyer can expect will depend on the seller's communications and the "nature of the thing." The law indicates that a buyer may in any case expect that he can use the purchased item normally for which he bought it. Thus, to answer the question of whether a seller is liable for defects, what matters is whether the defect hinders normal use. According to established case law, "normal use" refers to everything it is understood to mean in common parlance(ECLI:NL:HR:2005:AU2414).
Buyer's duty of inquiry
If a buyer had reason to doubt, he should have made his own investigation. This is the so-called duty to investigate. For example, buyer who bought a reasonably old house at a low price should expect the house to have defects. This buyer has a duty of investigation to identify the defects. If he fails to do so, the buyer cannot sue the seller on the grounds of nonconformity after the conclusion of the purchase agreement. The scope of the duty to investigate depends on the circumstances of the case. Consider the visibility of the defect, the seller's communications and the buyer's expertise.
Seller's duty of disclosure
On the other hand, the seller also has a duty: the duty of disclosure. If the seller knows that the home or commercial property has a particular defect, he must disclose it. If the seller fails to do so, then the seller cannot point out any obligation to investigate on the part of the buyer. Indeed, reasonableness and fairness dictate that the seller cannot invoke the knowability of the defect (and thus the buyer's obligation to investigate) if the seller knew of the defect before the purchase but did not inform the buyer of it. In other words, the seller's duty of disclosure outweighs the buyer's duty of investigation.
Normal use
A case presented to the District Court of Limburg(ECLI:NL:RBLIM:2020:8215) involved the following. The buyers had bought a house using the NVM purchase agreement. They soon discovered that the condition of the facades was different than expected. The paint on the facades was coming off and pieces of stone were crumbling due to moisture problems. The buyers then claimed non-conformity, as the house was not suitable for normal use as a home. The buyers therefore held the sellers liable for the damages they suffered as a result of this hidden defect.
The court ruled that in this case there was no defect that prevented normal use as a home. According to the court, the buyers had not sufficiently substantiated that there was a structural problem with regard to the facades. In addition, they had indicated that there were no moisture problems on the inside of the house. Thus, according to the court, the house was suitable for normal use, namely for habitation.
In addition, the court found that the defect on the facades was apparent to the buyers. The sellers had indicated prior to the purchase that the paint on the exterior walls was peeling and sometimes even pieces of stone. Therefore, the buyers should have made further investigation into the condition of the exterior walls. According to the court, the buyers had ample opportunity to do so: in fact, they had viewed the house several times in the presence of a construction expert. Since it was not a defect that interfered with normal use as a dwelling and, in addition, was known to the buyers, the hidden defect was their responsibility under the purchase contract.
Pay attention to the duty to complain!
In the foregoing, the complaint period is still of great importance. This is because the law stipulates in Article 7:23 BW that the buyer can no longer invoke non-conformity if the buyer has not complained to the seller about the defect within a reasonable time. The buyer must therefore complain within a reasonable time after he discovered or should have discovered the defect. This provision protects the seller from late and therefore more difficult to dispute complaints. If a complaint is made too late, the seller may no longer be able to prove that there was no defect. In addition, the question is then whether the defect has not already worsened or caused more damage than in the case if the buyer had complained within due time.
It depends on all the circumstances of the case as to what should be understood by "competent time." Consider the observability of the defect, the manner in which the defect can be discovered and the buyer's expertise.
In addition, the statute of limitations for the buyer's claim against the seller based on non-conformity, lapses after two years after the buyer first complained. This means that the buyer who has complained can no longer sue the seller for damages if he has not heard from him for two years. Since this is a far-reaching legal consequence, a buyer should be aware of it.
Conclusion
A disappointed buyer can sue the seller for compensation for damages resulting from hidden defects if the delivered item does not conform to the purchase agreement. According to the law, an item does not comply with the purchase agreement if it is not suitable for normal use. What is to be understood by "normal use" depends on the circumstances of the case. If a buyer believes there is a defect that prevents normal use, he should complain to the seller within a reasonable time after discovery of the defect. In addition, the buyer should then file a claim against the seller within two years to prevent the claim from being time-barred.
