Hidden defects in real estate transactions in Belgium: an update based on recent case law

Hidden defects are those that normally careful purchasers placed in the same circumstances have not or should not have noticed when visiting the real estate they want to purchase. These can include mould formation, a heating system that does not work properly, an (invisible) leak in the roofing, facade bricks that are not sufficiently frost resistant, etc.

A hidden defect must have a degree of seriousness and, therefore, affect the stability of the building, lead to major repairs or prevent the normal use of the building. A reduction of the use of the building can also constitute a hidden defect – to the extent that purchasers, if they had known of the defects, would only have bought at a lower price.

The hidden defect (or the cause of it) must also have been present at the moment of transfer of ownership. Defects that arise after the transaction, are not hidden defects.

Sellers' duty to inform

As a general rule, real estate is sold including any defects. Repairing these defects is therefore at the expense of the purchaser.

However, the legislator has intervened by requiring the seller to provide certain information or hand over certain certificates, at the latest, at the moment of the signing of the notarial deed, as environmental obligations in real estate transactions are increasingly used to pursue health and climate policies.

Furthermore, there is a duty on sellers to inform the purchaser of any (major) defects they have knowledge of, even if these defects are not visible. If sellers are manufacturers or a specialised seller, they are obliged to deliver the item without defects and must take all measures to detect all possible defects (Cass. 15 January 2021, C.20.0241.N). It should be noted this obligation of results does not rest on every professional seller, but on the manufacturer and on the specialized seller, regardless of whether the latter is a professional seller (Cass. 15 January 2021, C.20.0241.N).

Finally, the Belgian Civil Code has introduced an objective liability for the seller in case of hidden defects (art. 1641-1649 old Civil Code).

Sanctions and indemnification

A claim for indemnification can be introduced by the purchaser, whether or not the seller was acting in bad faith. A seller is liable for any hidden defect, whether they knew about it or not.

If sellers were unaware of the hidden defect, they are only liable to a limited extent and the purchaser has the choice to annul the purchase and be repaid the purchase price and the transaction costs (actio redhibitoria) or to keep the building at a reduced price (actio aestimatori). This is a full choice of the purchaser, so that an offer by the seller to perform in kind obligations to indemnify against hidden defects by repairing the defect must not be accepted by the purchaser (Cass. 23 March 2017, C.15.0232.F).

In case of bad faith by the seller, the purchaser can also claim all additional damages. The burden of proof of this bad faith lies with the purchaser.

Claim within a short period of time

The purchaser has an obligation to bring an action for hidden defects within a short period of time. This is understood to mean "as soon as possible" after the purchaser has discovered the hidden defect or should have reasonably discovered the hidden defect.

If the defect only comes to light after the building has been resold, the short period of time will only commence from the moment at which the original purchasers (now sellers) are themselves sued by the new purchaser (Cass. 23 June 2022, C.20.0470.N).

If the purchasers are late in claiming compensation for hidden defects, they can also no longer initiate a claim for non-conformity of the building with terms and conditions the sale and purchase agreement (Cass. 6 January 2022, C.21.0165.N).

Exoneration clause

Provided they are in good faith, sellers can limit or exonerate liability for hidden defects contractually.

Sellers who, because of their professional expertise, must have been aware of the defect, are, in any case, considered to be acting in bad faith.

When sellers' ignorance is due to negligence, they can also not rely on a clause that exempts from liability (Cass. 18 February 2019, C.18.0346.N). This was the case of a non-professional seller of real estate, who had built the property without the assistance of a professional contractor or architect, and had deviated from the original concept of a watertight concrete tank for the basement. These construction errors led to water infiltration. The court noted that the seller should have at least realised that their method of construction would give rise to problems and that they had failed to obtain proper information by experts.