Defects in a house – what can you do?

Latent defects – things to keep in mind

• A buyer has a duty to inspect and investigate. Often latent defects are a matter of interpretation as to what the buyer could have detected if they had conducted a careful examination. The condition, age and price of the property also play a role.

• You can assert a claim for a latent defect for up to ten years from the date you took over ownership of the property, but you must assert a claim within a reasonable time from the date you first detected the defect.

• You can demand a reduction in the purchase price. If the defect is of material significance, you can demand cancellation of the contract within one year of the transfer of ownership.

What is a latent defect?

A latent defect is a defect that was already present when you purchased the house and that you could not detect during a reasonably thorough property inspection before the purchase. In addition, you should not have had to expect the defect given the age, condition and construction of the property.

For something to be considered a latent defect, these four criteria must be met:

• The defect must have existed at the time of purchase.

• The defect must have been undetectable.

• The defect must not have been reasonably foreseeable or expected.

• The characteristics of the real property differ from the information provided by the seller.

How do I go about making a formal claim about a latent defect?

You can make a formal claim about a defect if the defect could not be detected at the time of purchase despite a careful inspection. You can also make a formal claim if the house does not correspond in some other way to what you and the seller have contracted.

If you want to make a formal claim about a latent defect, first contact the seller. There are no specific requirements as to how you must make a formal claim about a defect or fault, however we recommend that you contact the seller in writing. For example, you can send an e-mail message. Remember to save a copy of the e-mail message as supporting evidence.

The buyer has a duty to conduct an inspection

As the buyer, it is your responsibility to have fulfilled your duty to inspect and investigate in order for the defect to be considered hidden. This means that you must have a thorough and detailed inspection of the entire property conducted, i.e.:

• land

• buildings and building facilities

• electricity and heating

• water

• plumbing including wastewater removal

• white goods

• ventilation

• the presence of radon

• fireplace and flues/chimneys.

You can either perform the inspection yourself or hire a professional property inspector.

If the person doing the inspection made a mistake

If the property inspector has not properly inspected everything that should have been inspected, or has missed visible defects, the responsibility remains on you. However you may be able to claim compensation from the property inspector.

The National Board for Consumer Disputes (ARN) has previously ruled that the property inspector’s mistake must have led to a loss for you and there must be a causal link between the mistake and the loss. ARN held that a mistake that a competent and normally diligent property inspector should have detected may give rise to a right to compensation (case 2009-6362).

However, there may be circumstances or preconditions that limit your right to compensation. For example, you may have been told that an inspection will not be performed under a bathtub unless you remove the front (case 2009-10643).

Read the summaries in ARN’s database of guidance decisions (In Swedish)

File a consumer complaint with the National Board for Consumer Disputes

If you and the property inspector cannot resolve it between the two of you, you can lodge your own complaint with ARN.

Learn about what is required for ARN to examine your case

Disclaimer of liability for latent defects

A seller can disclaim liability for latent defects by including a disclaimer in the purchase and sale agreement. This means that you, as the buyer, will not be entitled to receive compensation for a latent defect that is detected at a later date. A disclaimer of liability for latent defects often results in that the purchase price is lower.

A disclaimer of liability for latent defects is only valid under the precondition that the seller is not aware of these latent defects when the house is sold. If the seller was aware of the defects at the time, the disclaimer of liability is void. Also if the clause is deemed to be unfair, it may not be valid.

How much time do I have to lodge a complaint?

You can lodge a claim for a latent defect for up to ten years from the date you took over ownership of the property. But bear in mind that you must have lodged your complaint within a reasonable period of time after detecting the defect.

What can I demand from the seller?

What you can claim is a reduction in the purchase price. If the defect is due to negligence on the part of the seller or if the residential property does not conform to the seller’s representations, you may also be entitled to compensation for damages.

If the defect is of material significance or substantial, you can – within one year of taking over ownership – ask for the contract to be rescinded, i.e. for the purchase to be annulled. If the seller has “acted fraudulently,” i.e. deceived you in a material aspect, you can demand rescission even after more than a year.

Obtain the advice of a real estate lawyer

Disputes about defects or deficiencies in residential property are often complicated. You should contact a real estate lawyer for advice, especially if it will be costly to rectify the problem. Members of the Homeowners’ Association get free of charge advice from lawyers, land surveyors, and building technicians.

Settling the dispute in court

If you and the seller have a dispute that you cannot resolve, a court, most likely a district court, can hear the dispute.

In such a situation, it may be worthwhile to contact a lawyer who can advise you to determine your rights and what you can make a formal claim or demand for, and what remedies you might have available to you. You should check to see if you have any legal expenses coverage via an insurance policy. Sometimes legal assistance insurance can cover certain costs such as legal fees for representation.

Further information about settling disputes in court