Bad Faith in Selling Real Estate


Cologne, Germany -- (SBWire) -- 03/05/2013 --GRP Rainer Lawyers Tax Advisors, Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart, Hanover, Bremen, Nuremberg, Essen and London explain: The Koblenz Higher Regional Court (OLG) (judgment of 15 January 2013, Az.: 4 U 874/12) recently decided in favour of the purchaser of a house with marten infestation in the roof. The sellers had declared at the time of purchasing that they were not aware of any hidden defect in the house. Nevertheless, the purchaser discovered damage to the roof insulation a few months later caused by marten feeding and faeces.

The sellers argued that they had already partially cleared up the roof and on that basis assumed that the damage was remedied. However, the Koblenz OLG is of the view that extensive destruction by the marten, which had been making a noise in the roof for about a year, was evident such that the sellers must have at least suspected and accepted that the entire roof was infested. This should have been disclosed to the purchaser so that he could have reconsidered signing the agreement.

The purchase agreement did exclude the sellers’ warranty, yet this did not protect them from the purchaser’s claim for damages. The seller cannot in particular invoke a warranty exemption insofar as he has fraudulently concealed a defect or assumed a guarantee for the object’s condition.

The judgment of the Koblenz OLG demonstrates that purchasers should not be immediately deterred by warranty exemptions of the seller. As a purchaser faced with concerns, you should instead draw on the advice of a lawyer versed in the law of sale and, where necessary, also real estate law, who can closely examine your individual position and claims.

However, also as a seller, in particular one dealing in real estate, you should always legally protect yourself. Should it in particular turn out afterwards that, for example, an agreed warranty exemption is not effective or for other reasons not applied, this can have devastating consequences. Consulting an experienced lawyer at the planning stage of the sale can potentially protect you from such nasty surprises.

About GRP Rainer LLP
GRP Rainer LLP is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Essen, Frankfurt, Hamburg, Hannover, Munich, Stuttgart, Bremen, Nuremberg and London UK.
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