DREAMHOUSE NIGHTMARE - LIABILITY FOR PROPERTY DEFECTS IN HUNGARY

19 September 2017

Purchasing a property in Hungary can turn into a nightmare if you become aware after takeover that your apartment suffers from hidden defects. What can you do if you become aware of these defects only years after takeover? What kind of rights do you have and how long can you enforce those rights against the seller in Hungary? We will address these issues in the present article.

What is a defect?

At first, the concept of defect should be clarified. We speak about a defect if the property purchased does not conform to the seller’s representations, or to the standards governing the quality of real properties.

If the seller represents that the apartment is newly built, or newly renovated, the standards are higher than in case you buy a used flat.

Hungarian courts hold that in case of buying a used flat, its mechanical condition shall conform to the age of the property. In other words, if the flat purchased was built 10 years ago, you cannot expect that the heating system will not break down in the forthcoming 10 years, or the accessories will work flawlessly.

However, if the seller represents that he newly renovated the 10 years old apartment, you can reasonably expect that the in-built equipment are new, and will be fit for use in the near future.

Expert’s competence

Save if your seller expressly guaranteed that the property is flawless, in order to hold your seller liable for any defect, first you have to prove that the defect existed at takeover. In case of an express seller’s guarantee, there is a presumption that the defect existed at takeover, and the seller has to prove that he took over a flawless propery.

In vast majority of cases the question wheter the defect existed at takeover falls into real estate expert’s competence. If you become aware of a defect, we highly suggest to contact a reliable real estate expert as soon as possible, so that the exact nature and cause of the defect can be clarified.

Patent and latent defects

The defect can be patent, that you as a reasonable purchaser can observe at site inspection. We speak about latent or hidden defect, if you cannot discover the defect at site inspection.

For example, a water leaking that leaves huge traces on the wall of the bathroom is a patent defect, because it is detectable for an average buyer for the first sight. At the same time, the poor condition of the electrical wires in the wall cannot be seen, so it can be a latent defect.

The seller is liable for you only for the latent defects, for this reason the preliminary inspection of the property is crucial.

According to Hungarian court practice, when inspecting the apartment, a private person buyer has to carry out the usual tests customary in case of an ordinary flat purchase (e.g. testing of electrical & heating systems, windows, etc.), but he is not obliged to bring engineers or experts with himself to carry out deeper testing, with the destruction of the property.

At the same time, if the buyer is a business, who purchases a property for commercial use, the standard is higher, because it is expectable from a business, to bring specialists for testing the real property.

Your rights

If it turns out that your property suffers from a latent defect, there is a priority order of the rights you can enforce.

At first, you have right to request that the seller repairs the defect.

If the seller does not undertake to repair the defect, or he cannot repair the defect within a reasonable time, or you have lost your interest in repairing the defect with the seller,

• - you can repair the defect yourself and claim the cost of repair from the seller
• - if the defect cannot be reasonably repaired, you can claim back the proportional part of the purchase price
• - in case of material defect, you can rescind the contract and claim back to full purchase prince

In addition to the above rights, if you suffered damage because of the defect (e.g. you had to rent another apartment, or you lost income because you could not lease out the apartment), you can claim compensation from the seller.

Deadlines

You have to notify the defect to the seller in due time, i.e. as soon as possible from detection, and you are responsible for the damage occurred because of late notification.

In case the seller is a company, and you are private person buyer, there are 2 presumptions favouring your interest:

• - if you detect the property defect within 6 (six) months from entering into possession, it shall be deemed that it was a latent defect.
• - if you notify the defect without 2 (two) months as of detection, it shall be deemed that you notified the seller in due time.

You can enforce your rights within 5 (five) years as of entering into possession of the apartment.

However, if you could not detect the defect, or you could not enforce your rights because of excusable reasons, you have 1 (one) year to enforce your right, even after the expiration of the above 5 (years).