In this article we will deal with issues that may arise when purchasing second hand or used property, and in particular the purchase of property on an ‘as is’ basis. This can involve important consequences for the purchaser with regard to claims for compensation in the case of defects, imperfections or repairs following acquisition of the property.
We stress that the advice provided in this article refers to cases of purchasing second hand properties, and by no means applies to off-plan purchases, or new build properties purchased directly from the property developer, where the acquirement comes with a series of guarantees not applicable to kind of acquisitions we will explain below.
Spanish Law, and in particular the Civil Code establishes that the vendor is obliged to take responsibility for any HIDDEN IMPERFECTIONS found in items sold if the vendor has made them unfit for the use they were intended for. Or, if the vendor has diminished usability to a degree that if the buyer had been aware, the purchase would not have gone ahead, or a lower price would have been agreed.
Nonetheless, it is important to take into account that when selling a second hand property, the vendor will NOT be responsible for evident defects or those that are visible. Neither will the vendor be responsible for those that are not visible if the purchaser is a surveyor and due to his or her profession should be aware of them.
Therefore, according to the regulations in force, and the doctrine of case-law, in order for the vendor to be responsible for defects or hidden imperfections in the sale of second hand properties, the following requirements must be met:
- The imperfections or faults must be hidden, this is to say, the defect must not be evident or visible. In this case the buyer would be aware of the defect and therefore the purchase would not go ahead, or a lower purchase price may be agreed
- The imperfections or faults must be pre-existent to the sale. The defect must already exist at the time of signing the contract even if it appears later. Therefore, the buyer is required to prove not only the existence of the defect, but also its existence at the time of signing the contract. If this is not the case, the vendor will not be deemed responsible
- Finally, the defect must be serious, that is to say that the level of seriousness causes the purchase to be devoid, totally in terms of the designated use of the property in question, or that the designated use is diminished partially to an extent that that had the buyer been aware of the reduction in value, he or she would not have acquired the property
The vendor of a second hand property is responsible for the hidden imperfections found, provided that the imperfections appear within six months as from the handing over of the property.
The purchaser should file the claim within this six-month period, being the expiry date for any claim. We must also support the claim with an expert report proving the existence of the aforementioned legal requirements (being the existence of a defect, hidden, serious and pre-existent to the sale).
In the case that you are the vendor of the property, you must assure that it is clearly stipulated both in the initial sale contract, and in the subsequent Public Notary Deeds, as an ‘as seen’ property. You must also assure that the buyer expressly waivers the right (allowed by law) to make any claims subsequent to purchase for any defects found in the property.
In the case that you are the purchaser of the property, you should make sure the property is professionally surveyed, and that any defects, imperfections or repairs required are certified previous to signing any contact or handing over any deposit or partial payment on the property. You should then make sure that the findings are included in the private sale contract. You can either negotiate a reduction in price corresponding to the estimated repair costs by way of compensation, or stipulate that the repairs must be carried out by the vendor previous to signing the deeds.
In both cases, at MSG LEGAL, our team of Property Law experts can advise you flawlessly on drafting the terms and agreements to be included in the contract, therein protecting your personal interests and rights in any scenario which may occur.
Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice.