We previously wrote a blog on non-conformity in real estate. Due in part to rising house prices, buyers are (rightfully) critical of newly purchased homes or commercial properties. Case law on hidden defects and non-conformity is highly case-specific, making outcomes difficult to predict. Now that rainfall in the Netherlands has increased by 26% over the past century, this blog focuses on a common defect: leaks.
Under Article 7:17 of the Dutch Civil Code, there is non-conformity if an immovable property does not possess the characteristics necessary for normal use, which a buyer need not have doubted, as well as characteristics that the buyer could reasonably expect under the given circumstances.
As mentioned, this is highly dependent on the specific facts. A classic legal answer, but nevertheless true. Relevant factors include the content of the purchase agreement and sales information, the seller’s statements, the (in)visibility of defects and the buyer’s duty to investigate.
In general, a buyer cannot assume that a leak in a purchased property automatically constitutes non-conformity. If visible signs of leaks were present during viewings, courts are more likely to rule that the buyer breached their duty to investigate.[1] However, this does not apply if the seller failed to meet their duty of disclosure.
To be considered a defect that impedes normal use, the leak typically must be serious. If a buyer fails to act promptly and adequately after discovering a leak, courts are less likely to find that the leak impeded normal use. For example, the District Court of North Holland ruled that a serious leak could not have been present if the buyer waited a year before carrying out repairs.[2]
In 2020, the Arnhem-Leeuwarden Court of Appeal assessed the concept of “normal use” of a home:
“A defect that impedes the use of the property for habitation generally only exists in the case of serious defects, such as one that endangers the safety of habitation either immediately or in the near future, if not remedied.”[3]
Whether this threshold is too high in the context of leaks is debatable, as a leak rarely jeopardises the safety of habitation. In practice, this standard is applied more leniently. For instance, the Court of Appeal in The Hague ruled in 2021 that even a less severe leak could result in non-conformity, especially in a relatively new home.[4]
In most transactions, sellers now complete a questionnaire prior to sale. It is important to note that a completed questionnaire does not constitute a warranty and does not relieve buyers of their duty to investigate.[5] The fewer the answer options in a questionnaire, the less evidential value the seller’s responses will carry.
That said, seller statements on a questionnaire can still be relevant. If a seller explicitly states that no recent leaks have occurred, and this is demonstrably false, the buyer cannot be blamed for failing to investigate further.
Not every leak prevents normal use, and not every statement results in a duty to pay compensation. Each case must be assessed individually to determine whether the leak qualifies as a (serious) defect and who bears the associated risk and cost under the given circumstances and agreements.
If you have been held liable for non-conformity, or wish to take legal action, feel free to contact me or one of the other specialists at GMW lawyers.
[1] Rb. Utrecht 23 februari 2011, ECLI:NL:RBUTR:2011:BP7677, r.o. 4.5 t/m 4.7.
[2] Rb. Noord-Holland 6 oktober 2021, ECLI:NL:RBNHO:2021:8906, r.o. 5.6.
[3] Hof Arnhem-Leeuwarden 12 mei 2020, ECLI:NL:GHARL:2020:3682, r.o. 5.8 en 5.9.
[4] Hof Den Haag 21 december 2021, ECLI:NL:GHDHA:2021:2461, r.o. 7.4.
[5] Hof Arnhem-Leeuwarden 6 september 2011, ECLI:NL:GHLEE:2011:BR6807, r.o. 12.
