21. Nov 22

Buying/selling real estate and liability for material defects

When it comes to selling real estate, the seller is obliged to point out any hidden defects in the property that they are aware of. But according to Frankenthal’s regional court – the Landgericht (LG) Frankenthal – it is the buyer who bears the burden of proof.

It is common for contracts for the sale of real estate to exclude liability for material defects as a way of avoiding trouble. It should be noted, however, that this exclusion of warranty only applies to defects that were apparent to the buyer. Hidden defects must be brought to the buyer’s attention by the seller. We at the commercial law firm MTR Rechtsanwälte note that if the latter fraudulently conceals the existence of any such defect, the exclusion of warranty will not be effective and the seller will be held liable.

Crucially, this outcome is contingent on the seller having been aware of the hidden defects. According to a ruling of the LG Frankenthal from November 24, 2021, the burden of proof here is borne by the buyer (case ref.: 6 O 129/21).

The home at the heart of the case in question had been purchased by a married couple. Prior to this, the seller had personally lived in the property for many years. Five years after they moved into the house, the couple complained about the unsatisfactory state of the roof insulation, specifically the ill-suited insulation panels and the absence of a vapor barrier. Consequently, the married couple demanded that the seller provide them with a down payment for installing proper insulation.

Their claim was rejected by the LG Frankenthal. The court noted in its reasoning that a valid exclusion of warranty clause had been stipulated in the purchase agreement. Accordingly, holding the seller liable presupposed that he had acted fraudulently. However, it had not been proven that the seller was aware of the unsatisfactory state of the roof insulation and that he had fraudulently concealed this. The court pointed out that the roof was neither leaky nor damp, and the requirements for the heat certificate had been fulfilled. Additionally, the seller had lived in the house with his family for ten years without any restrictions, and during that time he had also made use of the attic. As such, it could not be assumed that he had been aware of the defects. The LG Frankenthal therefore concluded that the seller was not required to take responsibility for the defects in this case.

Lawyers versed in the rules and regulations relating to real estate can provide counsel.

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