Five Practical Tips for Home Sellers
Preparation is key in the home selling process to avoid problems down the line. Maiko Kalvet, portfolio manager of ERGO legal expenses insurance, shares an instructive experience and advice to follow when planning to sell an apartment or house.
A person sold an apartment that they had renovated themselves four years earlier – they had replaced electrical wiring, windows, and insulated the walls from the inside. A year after the sale, disputes with the buyer began. The buyer wanted to return the apartment because the air heat pump did not heat sufficiently, the windows condensed and froze, and let in drafts. Since the apartment seller had taken out legal expenses insurance, an ERGO lawyer prepared a response to the new owner. A year later, the former apartment owner received a court ruling in which the buyer wanted to return the apartment and, in addition to the purchase price, 2,000 euros in compensation or alternatively damages in the amount of 5,000 euros. An ERGO lawyer prepared a response to the claim and court proceedings began. At the buyer's request, an expert examination was ordered at a cost of 3,000 euros. Before the examination, an inspection was also conducted, which revealed that the apartment was in exactly the same condition as when purchased. However, the buyer kept pointing out new defects: improperly installed electrical wiring and water pipes, missing door handles in interior finishing, which were absent both in the sales listing and visually apparent when purchasing. The buyer was also aware that the seller had done the renovation themselves.
The court asked both parties to consider reaching a compromise, as the expert examination identified some non-compliance issues. Since the seller had indeed breached some requirements through their lack of knowledge and wanted a quick end to the court dispute, a compromise was reached, according to which they had to compensate damages up to 3,000 euros over a one-year payment schedule. Court costs remained with each party, and the apartment seller's costs as a legal expenses insurance client were covered by ERGO.
What should you do before selling an apartment to avoid such a situation?
1. Inform about all known defects in writing before the sales transaction
It is important to inform the buyer of all home defects in a timely manner. By doing this in writing, you avoid potential future disputes and ensure that the buyer is informed before the sales transaction is concluded. Honesty and transparency build trust and also reduce possible problems later.
2. Inform neighbors about problems
Problems related to neighbors can significantly affect the buyer's decision. Therefore, it is important that the buyer knows whether there have been any previous conflicts or problems with neighbors. Informing them helps avoid unpleasant surprises and ensures that the buyer makes their decision with full information.
3. Order a pre-purchase audit from a building expert to identify hidden defects
Hidden defects are often the biggest reason why future disputes arise between buyer and seller. Therefore, it is advisable to order a pre-purchase audit from a building expert to identify all potential hidden defects. Present the audit results to the buyer as well, so they know the condition of their potential new home.
4. List all defects honestly in the sales contract
All known defects should also be listed in the sales contract. This way, both parties are aware of all the terms of the transaction.
5. Check the documentation of the object being sold
Before selling your home, make sure all necessary documents are in order. This includes an extract from the land register, energy label, building permit, and other relevant documents. Properly completed and up-to-date documents give the buyer peace of mind that everything is in order with the property being purchased.
By informing the buyer of all defects and potential problems and presenting correct documentation, you ensure a smooth transaction and avoid costly future disputes. However, since it is never possible to foresee all problems, Maiko Kalvet recommends taking out legal expenses insurance, which provides additional support if problems do arise. Legal expenses insurance could be taken out right now or at least three months before selling real estate.
ERGO legal expenses insurance helps in situations where the policyholder or their family has been treated unfairly and this involves financial costs or compensation not received. The insurance covers costs related to legal assistance, protects rights in court, and provides guidance on how to handle the situation that has arisen. Learn more about legal expenses insurance here.
