Unveiling developments in property deals in Belgium: a recap following recent judicial decisions on concealed flaws
In the realm of real estate transactions, buyers are now more protected than ever before, as the latest laws and regulations emphasize increased transparency and stricter enforcement, particularly regarding hidden defects and the seller's duty to disclose.
When purchasing a property, the buyer assumes the cost of any repairs associated with existing defects. However, it's crucial to note that defects that arise post-transaction are not considered hidden defects. On the other hand, sellers are liable for any hidden defect, whether they were aware of it or not.
Sellers can attempt to limit or exonerate their liability for hidden defects contractually, but only if they act in good faith. Neglecting to obtain proper information from experts can prevent sellers from relying on a clause that exempts them from liability.
One of the key developments in this area is the introduction of the Mandatory Seller's Disclosure Statement. For instance, in Queensland, Australia, the Property Law Act 2023, effective from August 1, 2025, requires sellers to provide a fully completed and accurate disclosure statement before buyers sign contracts. This statement must include prescribed certificates and documents relevant to the property. Failure to comply gives buyers the right to terminate the contract, even after going under contract.
Sellers generally must disclose known material facts affecting the property's value or safety. These facts may include structural issues, pests, legal disputes, environmental hazards, and any defects that could influence a buyer’s decision. While some jurisdictions maintain a "buyer beware" standard, most demand full truthful disclosure to reduce legal liability.
Timelines for claims vary, but providing early, truthful disclosures helps sellers avoid lawsuits after closing. Buyers typically must act within statutory or contractual deadlines to raise claims about hidden defects not disclosed.
Penalties for failing to disclose or providing misleading information can include contract termination rights for buyers, damages claims, rescission of sale, or legal sanctions against sellers. The Belgian Civil Code, for example, has introduced an objective liability for the seller in case of hidden defects.
Sellers must update disclosures if new information arises before closing to maintain transparency and legal compliance, thereby limiting post-closing claims. If the defect comes to light after resale, the short period of time for claiming commences from the moment the original purchasers are sued by the new purchaser.
In summary, the trend is towards mandatory, detailed, and timely seller disclosures to protect buyers and reduce hidden defects disputes. Sellers and agents must carefully comply with local laws, deliver disclosures before contractual commitment, and update them as needed to avoid costly legal consequences. Specific rules and enforcement mechanisms depend on the country and region involved.
In case of bad faith by the seller, the purchaser can claim all additional damages. The purchaser has the choice to annul the purchase and be repaid the purchase price and transaction costs, or to keep the building at a reduced price. The purchaser has an obligation to bring an action for hidden defects within a short period of time. Sellers are only liable to a limited extent if they were unaware of the hidden defect.
The legislator requires sellers to provide certain information or certificates at the latest at the moment of the signing of the notarial deed. The short period of time for claiming starts when the purchaser discovers or should have reasonably discovered the hidden defect. If the purchasers are late in claiming compensation for hidden defects, they can no longer initiate a claim for non-conformity of the building.
Sellers have a duty to inform purchasers of any (major) defects they have knowledge of, even if these defects are not visible. This duty to inform applies to sellers who are manufacturers or specialized sellers. A claim for indemnification can be introduced by the purchaser, whether or not the seller was acting in bad faith. The burden of proof of bad faith lies with the purchaser. Sellers who are professionals and should have been aware of the defect are considered to be acting in bad faith.
Hidden defects in real estate can include mould formation, malfunctioning heating systems, invisible roof leaks, and facade bricks not frost-resistant. It's essential for all parties involved to understand these changes and comply with the new regulations to ensure a smooth and legally sound real estate transaction.
- Sellers should take note that sellers can be held liable for any hidden defects in real-estate transactions, regardless of their knowledge, and failure to obtain proper information from experts can nullify any attempt to exempt them from liability.
- In order to protect themselves from hidden defects claims, buyers must act within statutory or contractual deadlines and maintain records of any repairs associated with existing defects to show they didn't assume the cost of any undisclosed hidden defects.
