Valuable Guide: What to Pay Attention to When Selling Real Estate and What to Treat as a Defect?
Unfortunately, it must be acknowledged that a large portion of property owners are not aware that their responsibility for a property does not end with signing the purchase agreement and handing over the keys. If the buyer discovers a defect within a reasonable time that they were not aware of when concluding the contract, the seller is liable for the property's non-compliance with the contract terms. The buyer then has the right to demand from the seller the elimination of the defect, compensation for costs, or even to reverse the purchase agreement.
Seller and buyer: obligations, rights, responsibility
The legislator has placed an obligation on the seller to inform the buyer of all known defects of the property – so-called real estate characteristics. The main disputes in sales contracts arise from the non-compliance of the property transferred to the buyer with the contract terms. Therefore, the parties should define in the sales contract as precisely as possible what properties the object of the contract must have.
The property transferred to the buyer must comply with the contract terms, in particular regarding quantity, quality, type, description, and packaging. Documents belonging to the property must also comply with the contract terms. If the quality of the contractual obligation's performance does not derive from the contract or the law, the contracting party must perform the obligation at least with average quality taking into account the circumstances.
Here we provide a good checklist – things that must definitely be discussed when selling real estate:
– the size of the living space and other technical data (check for compliance with registry data, original plan);
– heating sources (chimney sweep certificate), if the fireplace doesn't draw/has not been used, thermal insulation;
– heating system (when installed, renovated), air-source heat pump and other added equipment (setup);
– electrical wiring, outlets (when and what has been replaced), project/audit, number of amps, connection fees;
– water and sewage system (condition of pipes, water pressure, bathroom floor slope and heating, moisture);
– windows (what type, if wind blows through, if they get "foggy"), ventilation;
– condition of used furniture;
– if there are known defects, then definitely point them out (roof waterproofing and if there are sagging, moldy or rotten spots, cracks, unpleasant odor, rodents and insects);
– noise, vibration exceeds permitted levels, in living space 40 db during the day, 30 db at night (a working factory is located next to the house);
– access (public road, road easements);
– property documentation (reconstructions, use permit/authorization);
– third parties' rights (rental agreement, personal use right, preemption right, utility network restrictions, etc.);
– legal provisions that prevent the use of the property, which the seller knew or should have known about when concluding the contract;
– information that the buyer should know about (recognizable significant interest): loud parties frequently occur in the neighboring apartment, accommodation services are provided to many foreign individuals at the residence, the condominium association has problems with debtors, proper maintenance is not carried out, etc.
What are hidden defects?
Hidden defects are those that the buyer did not know about and should not have known about. For example, they moved into a new home in the summer, but only at the beginning of the heating season does it become clear that the radiators do not get warm at all or the stove cannot be heated. Or with the first rain, it turns out that the roof leaks somewhere near the chimney edge. In such cases, the previous owner who knew about the defects but said nothing bears responsibility. The seller is not liable for the property's non-compliance with contract terms if the buyer knew or should have known of these defects when concluding the contract (the points listed on the back of the page that characterize the property being sold).
Did you know that…
Estonian law allows limiting the seller's liability through agreements with the buyer, but only to a certain extent. Namely, the seller does not escape liability for defects in the property being sold if the seller was or should have been aware of the defects but has not disclosed them to the buyer. Thus, an "as is" clause does not help the seller escape liability for defects in the property being sold that the seller has concealed.
If the contract concerns a building that has been standing empty for years, has deteriorated, and which the seller has never used themselves, then it is possible to propose that the buyer agrees to waive claims against the seller that arise from the condition of the building – the property is sold as is, so to speak.
We wish everyone successful real estate transactions!
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