Is the legal guarantee on real estate coming to an end?
Author of the article: JUDr. Lukáš Slanina, ARROWS advokátní kancelář (office@arws.cz, +420 245 007 740)
On 6 January 2023, the amendment to the Civil Code No. 374/2022 Coll. came into force.What changes this amendment brings and how it affects the sale of real estate, you will find out in the following lines.
The reason for the adoption of the amendment was mainly the correct implementation of some directives concerning consumer protection and the elimination of some legislative shortcomings of the law. One of the areas of the Act which the legislator considered not very satisfactory in terms of clarity and readability was the regulation of the so-called "special provisions on the sale of goods in shops".
This regulation was primarily intended to apply to the sale of goods - i.e. tangible movable property - by an entrepreneur in the course of his business activities. However, it also applied in practice to the sale of immovable property (including residential units) by an entrepreneur. An example is the sale of a flat if the contract on the seller's side was concluded by a person operating a real estate business.
This had particular implications in the area of rights under defects - in these cases, the entrepreneur's two-year statutory guarantee applied. If a defect occurred in the real estate within two years of the acceptance, the consumer could claim it from the entrepreneur and exercise his rights arising from the defective performance (the right to have the property repaired, the right to a reasonable discount on the price of the real estate, etc.).
The amendment to the Civil Code renamed the entire subsection as 'special provisions on the sale of goods to consumers' and at the same time narrowed the scope of the subsection to only tangible movable property. This means that these provisions no longer apply to the purchase of immovable property. However, the legislator wanted to maintain a certain standard of protection for consumers buying real estate and therefore adopted the following rule:
If the purchaser is a consumer and the defect manifests itself within two years of the risk of damage to the thing passing to the purchaser, the immovable property is deemed to have been defective already when the risk of damage passed, unless the nature of the defect precludes this. This period does not run for the time during which the buyer cannot use the thing, if he has rightly complained of the defect.
The concept of the so-called statutory warranty therefore effectively ends. In the case of real estate, however, it has been replaced by a rebuttable presumption, through which the legislator seeks to ease the burden of proof on the consumer with regard to defects arising within two years of the transfer of the risk of damage to the thing. However, the consumer must be able to prove that the defect was caused by a fact which could have been present at the time of performance. Thus, for example, if the property leaks a year after purchase, the cause may be a defective roof or poor insulation.
If you are unsure how to deal with a defect claim on a property, please contact us and we will be happy to help.
Robert Dürrer contributed to this article.