Hidden defects of a property

A hidden defect of a property is a defect that existed at handover but that the buyer could not detect with ordinary care when signing the contract or at the viewing. Typical examples are damp hidden under new plaster, damaged wiring or pipes in the walls, or faulty foundations. Under the Czech Civil Code the seller is liable for defective performance even if the seller was unaware of the defect.

What does not count as a hidden defect

• A defect the buyer must have noticed with ordinary care when signing: the buyer has no rights from it unless the seller expressly assured them the property was free of defects or concealed the defect fraudulently (Section 2103 of the Civil Code).
• A defect that can be found in a public register, for example on the title sheet (LV): it is borne by the buyer, with the same exceptions (Section 1917).
• Besides defects of the building there are legal defects, where a third party claims a right to the property that the buyer did not and need not have known about (Section 1920).

Deadlines

• The defect must be notified to the seller without undue delay after the buyer could have discovered it with due care (Section 2112).
• A hidden defect of a building fixed to the ground must be notified within five years of acquisition at the latest. Otherwise, if the seller objects, a court will not grant the claim; this does not apply if the seller knew or must have known about the defect (Section 2129(2)).
• If the buyer is a consumer and the defect appears within two years of handover, the property is presumed to have been defective at handover unless the nature of the defect rules this out (Section 2129(3)).

What the buyer can claim

Depending on whether the defect is a material breach of contract, the buyer may claim removal of the defect, a reasonable price reduction, or withdraw from the contract (Sections 2106 and 2107). An expert valuation usually helps quantify the reduction. Rights from defective performance do not exclude damages (Section 1925).

Why check in advance

What is recorded in the land register or visible at the viewing usually cannot be claimed as a defect after the purchase. Before signing, it helps to have the title sheet extract, inspection reports, the energy performance certificate, a viewing with a building surveyor, and a description in the purchase contract of the property's condition and the defects both parties know about.

Frequently asked questions

Does an 'as is' clause work?

A declaration by which the seller limits in advance the statutory scope of its duties for defective performance is disregarded; the buyer, however, may waive their rights in advance in writing (Section 1916(2)). In a contract between a business, such as a developer, and a consumer, a term excluding or limiting rights from defective performance is always unfair (Section 1814). A lawyer can assess how such a clause works in a particular contract.

When does the five-year period start?

On acquisition. For property recorded in the land register, the buyer acquires ownership by registration (vklad), with effect from the day the application reached the cadastral office.