Five Practical Tips for Home Sellers
Preparation is key in the home selling process to avoid problems later on. Maiko Kalvet, portfolio manager of ERGO's legal expenses insurance, shares a real-life story and advice to follow when planning to sell an apartment or house.
A person sold an apartment that he had renovated himself four years earlier – he had replaced electrical wiring, windows, and insulated the walls from inside. A year after the sale, disputes began with the buyer. The buyer wanted to return the apartment because the air-source heat pump did not heat sufficiently, the windows condensed and froze, and let in drafts. Since the apartment seller had legal expenses insurance with ERGO, an ERGO lawyer drafted a response to the new owner.
A year later, the former apartment owner received a court ruling where the buyer wanted to return the apartment and, in addition to the purchase price, sought 2,000 euros in compensation or, alternatively, damages totaling 5,000 euros. The ERGO lawyer drafted a response to the claim and court proceedings began. At the buyer's request, an expert assessment was ordered costing 3,000 euros. Before the assessment, 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: incorrectly installed electrical and water pipes, missing door handles in the interior finishing, which were absent both in the sales advertisement and were visibly missing when viewing. The buyer was also aware that the seller had done the renovation himself.
The court asked both parties to consider reaching a compromise, as the expert assessment did identify some non-conformities. Since the seller had truly violated some requirements due to his lack of knowledge and wanted a swift end to the court dispute, a compromise was reached whereby he had to compensate for damages in the amount of 3,000 euros with a one-year payment schedule. Legal costs remained with each party, with ERGO covering the costs as the legal client of the apartment seller.
What should you do before selling an apartment to avoid a similar situation?
1. Inform the buyer in writing of all known defects before the sale
It is important to inform the buyer of all home defects in good time. 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 potential future problems.
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 fully informed.
3. Commission a pre-purchase audit from a building expert to identify hidden defects
Hidden defects are often the biggest reason why disputes between buyer and seller arise later. Therefore, it is wise to commission 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 the potential new home.
4. Honestly document all defects in the sales contract
All known defects should be documented in the sales contract as well. This way, both parties are aware of all the conditions of the transaction.
5. Review the documentation of the object being sold
Before selling your home, ensure that all necessary documents are in order. This includes a land register extract, energy label, usage permit, and other relevant documents. Correctly formatted and up-to-date documents give the buyer confidence 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 future costly 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 now or at least three months before selling the property.
ERGO's legal expenses insurance helps in situations where the insured or their family has been treated unfairly and this involves financial costs or lost compensation. The insurance covers costs related to legal assistance, protects rights in court, and provides guidance on how to proceed in the situation that has arisen.
Source: ERGO insurance
