A used apartment has a defect if
- it does not correspond to what was agreed
- it does not correspond with information provided by the seller prior to the transaction, where such information can be considered to have influenced the transaction
- the seller neglected to provide information which is likely to have influenced the transaction or sales price
- it is significantly inferior in terms of amenities, condition or other properties to what the buyer had reasonable grounds to expect
- the provisions on defects also apply to information on the surroundings of the apartment or services in the area, if such information is incorrect or misleading or was not provided by the seller at all
- if the apartment is sold by a company, it is also considered defective if the seller failed to comply with the decree on information to be provided in marketing housing
In assessing defects in used apartments, the key considerations are the contents of the agreement, the information provided by the seller and the buyer's liability to inspect the property. A used apartment or property is not new. A newly renovated apartment is naturally more expensive than one that clearly shows the signs of having been lived in. Sales prices are usually also influenced by any major renovation work that has an effect on maintenance charges. The seller of a used apartment in a housing company remains liable for defects for a period of two years. In special cases where the seller has acted in gross negligence or contrary to the rule of good faith, the buyer's right to appeal to a defect may be extended.
Seller must disclose material defects
If the seller fails to disclose an obvious defect, he may be held liable for it afterwards. The seller does not, however, need to specifically point out a scratch on parquet flooring covered by a carpet. The buyer must notice such defects himself when inspecting the apartment. Information provided regarding the apartment in marketing materials also plays a role in assessing defects.
If a brochure specifies the condition of the apartment as
- ”Good”, the buyer is entitled to expect that he will receive an apartment in good condition
- ”Fair” and ”Passable” indicate that there is at least a need to repair some surfaces or that the building is aging
The seller of an apartment is liable for all information provided to the buyer - including the information in the house manager's certificate. For example that the share of housing company debt or maintenance charges indicated are correct. Also the seller has to disclose significant upcoming renovation work which he is aware of and which will cause an increase in maintenance charges.
If the seller ends up having to give the buyer a price reduction due to incorrect information on the house manager's certificate, he may claim compensation from the housing company or the house manager. Consumer authorities do not, however, have jurisdiction over disputes between housing companies and their shareholders. If the dispute is related to incorrect information that inflicts damage on the seller and is included in the house manager's certificate, the seller may submit the matter, related to the housing company's or house manager's liability, to the Consumer Disputes Board.
Grievances related to transactions for used apartments often concern defects which the seller was unaware of and the buyer unable to detect before concluding the transaction. Even condition inspections may fail to detect a concealed defect.
Both concealed defects and their relevant costs of rectification must be material in order for them to fall within the seller's liability.
Housing company is liable for structures
If a defect such as humidity damage is detected in an apartment, the rule of thumb is that the housing company is liable for repairing the relevant structures and the owner of the apartment is liable for surface repairs. Therefore, claiming compensation from the seller should not be automatically seen as the avenue to pursue.
An exception to this rule is formed by housing companies in semi-detached houses or housing companies founded in historical building stock, where articles of association differ from the standard articles of association of housing companies. They may involve a broader liability for repairs for the owner compared to ordinary housing companies.
The maximum time for claiming defects in used apartments is two years from the posession of the apartment when the transaction is between two private individuals.
A defect must be reported to the seller within a reasonable time of detecting it. The assessment of reasonable time takes into consideration the fact that the buyer often has to study the defect and its associated costs of rectification before reporting it. A period of 4-5 months is generally seen as a reasonable time for reporting a defect.
The two-year deadline for reporting defects can only be extended in special cases where the seller has acted in gross negligence or contrary to the rule of good faith.
Sometimes a defect in a fairly new apartment may stem from defective construction. The buyer has the right to report a defect that was originally present in the apartment also directly to the first seller of the apartment, i.e. the founding shareholder.
A price reduction is the most common consequence of a defect
Claims for compensation must always be presented to the seller of the apartment - not the real estate agent or the housing company's house manager.
The most common consequence of a defect is a price reduction applied to the sales price. In transactions for used apartments the buyer may not demand that the seller rectifies a defect. The seller is not entitled to rectify a defect to avoid having to grant a price reduction. If the buyer reports a defect, he
- must report it to the seller
- contact the house manager before taking steps to rectify the defect. If the defect also concerns building structures, the buyer may inquire the house manager as to what portion of the repairs falls within the housing company's liability
- must give the seller the opportunity to observe the defect for himself
- should take photographs of the defect prior to rectification for use as evidence in the event of disputes
- should request written proposals for rectification of the defect, preferably from several service providers
When claiming a price reduction from the seller, the sum should be realistic. Compensation in the form of a price reduction rarely corresponds to the full amount of the rectification costs, as rectification of the defect results in the defective part being as good as new and the value of the apartment increases compared to the date of transaction.
If the defect has caused damages, the buyer may, in some cases, also be entitled to compensation for damages.
Annulment of transaction is rare
Annulment of the transaction only applies in cases where the seller is in material breach of agreement. In practice, annulment rarely happens.
- If the defect in the apartment can be rectified, the transaction may not be annulled.
- If the defect is not of material significance, the transaction may not be annulled even if the defect can't be rectified. In such cases, the buyer must accept a reduction in price.
File a complaint with the company
You can use the complaint forms on our website for making a claim to the seller regarding defective apartment.
File a complaint with the company
If your complaint is unsuccessful, contact the consumer advisors.