Hidden Defects in Real Estate Transactions in Spain

In the field of real estate transactions in Spain, the issue of hidden defects is important to protect buyers and maintain market integrity. These defects, which are not visible during an ordinary inspection, can affect the quality, value, and habitability of a property, creating legal uncertainty for both parties. Below, we explore how hidden defects are regulated within Spanish law and what measures can be taken to protect buyer`s interests. 

What are hidden defects in Real Estate Transactions? 

Hidden defects are flaws that affect a property and cannot be detected at first sight. They may include structural issues, electrical failures, plumbing damage, or any other defect that impacts the use and value of the property. Identifying these defects is crucial, as they can lead to significant costs for the buyer. 

• The defect must be hidden: Article 1.484 of the Spanish Civil Code specifies that the first requirement for it to be considered as a hidden defect is that it cannot be noticed at first sight. Therefore, if the defect can be identified by the buyer without requiring complete access, they would not be able to claim against the seller through the means we`ll explain below. 
• The defect must be serious: It`s important to emphasize that the hidden defect must be understood as such from a functional perspective. It should be assumed that if the defect had been observed, the buyer would not have purchased the property or would have paid a lower price for it.
• The defect must pre-exist the sale: The buyer must prove not only that there is a defect but also that it existed before the completion of the contract.

Seller`s responsibilities under the Civil Code

Article 1.461 of the Spanish Civil Code provides that the seller must ensure the property is free from hidden defects that make it unsuitable for its intended use. This means the seller is obligated to ensure that the property meets the buyer`s reasonable expectations. 

Article 1.484 also states that the seller is liable to compensate the buyer for hidden defects that affect the use of the property. This is especially relevant if the defects diminish the property`s value to the point where the buyer would not have made the purchase or would have demanded a lower price.

It`s important to note that the seller`s liability is limited to those defects that are not obvious. If the buyer, due to their experience or profession, should have identified the defects, the seller will not be held responsible.

Loss of property

The Civil Code also addresses the loss of property due to hidden defects. For instance, if a property suffers severe damage due to structural flaws, it should be examined whether the seller was aware of these defects.

1. If the seller knew about the defects: They must refund the sale price, cover associated costs, and compensate the buyer for the damage caused. 
2. If the seller was unaware of the defects: Their obligation is limited to returning the price and expenses paid by the buyer.

Legal options for the buyer

Article 1.486 of the Civil Code provides the buyer with several options if hidden defects are discovered: 

1. To terminate the sale contract: The buyer can choose to cancel the contract and receive a refund of the expenses paid. 
2. Request a price reduction: This option allows the buyer to request a proportional price reduction, determined by experts. 

Additionally, if the seller was aware of the hidden defects and did not disclose them, the buyer has the right to claim compensation for the damages suffered. 

Claim period

It`s crucial for buyers to act quickly, as they have a period of six months from the delivery of the property to file a claim for hidden defects, according to Article 1.490 of the Civil Code. 

Speed in filing the claim is essential, as any delay could affect the viability of the lawsuit. Given the possibility of hidden defects, it is highly recommended that buyers conduct a thorough inspection of the property before finalizing the transaction. Investing in the advice or professionals such as architects and engineers can be key to identifying hidden issues. Additionally, being advised by lawyers specialized in real estate law can help understand the legal implications and establish appropriate protection strategies. 

Hidden defects are a critical aspect of real estate transactions that, if not adequately managed, can result in significant financial losses for buyers. With proper knowledge and preparation, these risks can be minimized, ensuring safer and more transparent transactions. 

At Gentile Law, we guide our clients through the hidden defects that can arise in real estate transactions, ensuring they`re fully informed and protected. If you`re looking to understand these potential risks better, we`re here to help you navigate them with confidence. 

Marta Batalla Eguidazu 

martabatalla@gentile.law

+34 684 460 426