Hidden Defects After Buying a Property: What Can the Buyer Do?

Buying a property is one of the highest-value decisions in the life of a private individual or family. The buyer typically views the property several times and trusts that the purchased flat or house corresponds to the condition presented by the seller.

It does happen, however, that after the handover of possession defects come to light that could not have been recognised before the purchase. These may include, for example, water leakage, damp walls, mould, defects in the roof structure, faulty insulation, hidden mechanical problems, faults in the electrical system, or even a condominium, construction or usage-related problem that significantly affects the value or usability of the property.

This is when the question arises: what can the buyer do if they discover a hidden defect after purchasing the property?

What Does a Hidden Defect Mean When Buying a Property?

We can speak of a hidden defect when the property has a defect that already existed at the time of concluding the contract or at the handover of possession, but which the buyer could not have recognised during an ordinary viewing.

A hidden defect therefore does not simply mean that the buyer later became dissatisfied with the property. The legally relevant question is whether, at the time of performance, the property met the characteristics undertaken in the contract or expected under the law.

Under the Hungarian Civil Code, defective performance occurs when the service — in this case, the property sold — does not meet the quality requirements set out in the contract or in legislation at the time of performance. In a real estate sale and purchase, this means that the seller may bear warranty liability if, at the time of performance, the property suffered from a defect affecting its intended use, its value or the characteristics stipulated in the contract.

What Are the Most Common Defects?

In practice, the hidden defects uncovered after buying a property can be very varied. Common problems include damp, saltpetre or mould on the walls, which may have been concealed by fresh paint, tiling or furniture. Also common are roof defects, rainwater drainage problems, faulty insulation, an ageing electrical system, an inadequate heating system, signs of past pipe bursts, or problems affecting the common areas of a condominium.

It is also possible that the defect is not purely technical in nature. It may turn out later that there is a legal or usage-related circumstance concerning the property that affects its value or intended use. Examples include an unauthorised conversion, occupancy permit problems, a condominium legal dispute, a significant obligation related to common charges or renovation, or a neighbour-law circumstance about which the seller failed to provide adequate information before concluding the contract.

Is the Seller Liable for Every Defect?

No. This is one of the most important questions.

The seller is not liable for every circumstance that the buyer later happens to dislike. When buying a used property, the buyer must expect defects arising from the property’s age, condition, technical standard and visible wear and tear. In the case of a family house or flat that is several decades old, the same technical condition cannot be expected as with a newly built property.

The seller’s liability may primarily arise if the defect already existed at the time of performance, the buyer did not know of it and was not required to know of it, and the defect materially affects the property’s intended use, its value or the characteristics stipulated in the contract. If the buyer knew of the defect when concluding the contract, or should have known of it based on the circumstances, defective performance by the seller cannot, as a general rule, be established.

This is why the contents of the sale and purchase agreement, the seller’s statements, the advertisement, the message exchanges, the technical documents and the handover protocol are of great significance.

What Claims Can the Buyer Assert?

If the property was handed over with defective performance, the buyer may assert warranty claims (kellékszavatosság) against the seller.

Under the warranty for defects, the buyer may primarily request repair or replacement; in the case of real estate, however, “replacement” can obviously rarely come into play. In practice, a price reduction, reimbursement of the repair costs and, in more serious cases, even the question of rescission are far more typical.

With real estate, the most common claim is that the seller reimburse the cost of repairing the defect, or that the buyer receive a price reduction proportionate to the decrease in value caused by the property’s defect.

In serious cases — for example, if the defect renders the property essentially unfit for its intended use, or repairing the defect would involve disproportionately high costs — rescission of the contract may also arise. In real estate transactions, however, this is an exceptional legal consequence and always depends on the specific circumstances of the case.

How Long Can Claims Be Asserted?

In a real estate sale and purchase, a special time limit applies to warranty claims. Under the Hungarian Civil Code, warranty claims relating to real estate provided under a sale and purchase agreement become time-barred five years from the time of performance.

This does not mean, however, that the buyer should wait. If the defect comes to light, it is advisable to notify the seller in writing without delay. The more time passes between the handover of possession and the reporting of the defect, the harder it may be to prove that the defect already existed at the time of the sale and did not arise later.

What Must Be Proven?

One of the most important issues in hidden defect cases is proof.

The buyer generally has to prove that the property is defective, that the defect already existed at the time of performance, that the defect was not recognisable when the contract was concluded, and that the buyer suffered damage, costs or a decrease in value as a result of the defect.

In many cases, this is a technical expert question. In cases of water leakage, damp walls, roof structure defects, insulation problems or mechanical faults, the opinion of a judicial expert or a suitably qualified technical professional is often required. In an earlier conciliation board case, for example, an expert opinion played a decisive role in proving wall damp and water penetration, particularly because the renovation works may have been capable of temporarily concealing the problem.

Preserving evidence is therefore especially important. The buyer should take photographs and videos and keep repair quotes, expert opinions, invoices, correspondence, advertisements and every document related to the condition of the property or the information provided by the seller.

What Should the Buyer Do upon Discovering a Defect?

If the buyer discovers a defect after the handover of possession, the first step should be to document the defect. It is worth taking photographs and videos, recording when and under what circumstances the defect appeared, and involving a technical professional if necessary.

The seller must then be notified in writing. The notification should precisely identify the defect, the date it was discovered, the buyer’s position, and the claim the buyer intends to assert. It is unwise to communicate merely by telephone or verbally, because it may later become disputed when, what and with what content the buyer reported.

If the seller disputes their liability or is unwilling to reach a settlement, a lawyer’s demand letter, an expert examination or, as a last resort, court proceedings may become necessary.

Why Is the Content of the Sale and Purchase Agreement Important?

The statements contained in the real estate sale and purchase agreement can be of particular significance. It matters what information the seller provided about the condition of the property, whether they undertook responsibility for certain characteristics, and whether the contract contains a clause stating that the buyer is purchasing the property in the condition seen at viewing (“as viewed”).

It is important, however, that a purchase “as viewed” does not in itself necessarily exclude the seller’s liability for every hidden defect. This wording primarily means that the buyer accepted the visible, recognisable condition. For defects that are not visible, are concealed, or cannot be recognised even by a professional viewing, the seller’s warranty liability may still arise.

Both the buyer’s and the seller’s side should therefore proceed carefully in the contract. As a buyer, it is advisable to request specific statements about the condition of the property; as a seller, it is justified to disclose every known defect in writing. This can later reduce the risk of a legal dispute for both parties.

What Should the Buyer Pay Special Attention to with a Used Property?

When buying a used property, thorough preliminary checks are especially important. The buyer should examine not only the aesthetic condition of the property, but also the state of the roof, the walls, the doors and windows, the heating system, the electrical system, the water pipes, the insulation and the condominium documents.

In the case of a family house, examining the plot boundaries, outbuildings, permits, occupancy documents, energy condition, drainage and utilities can be particularly important. In the case of a condominium flat, the common charges, the renovation fund, planned major works, the condominium resolutions and defects affecting the common areas may be material.

For higher-value or older properties, it is advisable to view the property together with a technical professional, because a thorough preliminary inspection can prevent many later legal disputes.

Summary

A hidden defect after buying a property can present a serious legal and financial problem. The buyer, however, is not necessarily left without recourse. If the defect already existed at the time of performance and the buyer did not know of it and was not required to know of it, a warranty claim can be asserted against the seller.

The key to successfully asserting a claim is acting quickly and in writing, preserving evidence, involving an expert where necessary, and carefully examining the sale and purchase agreement and the seller’s statements.

It is advisable to consult a lawyer both before buying a property and after discovering a hidden defect, because properly prepared legal steps can significantly improve the chances of a settlement or of successfully asserting a claim in court.