When reality strikes...

When reality strikes...

Wake up to reality: A dream home, alright, but watch out for the defects. File photo by Aruna Chandaraju

Buying a house is a happy moment for the entire family, even if it involves the hassles of shifting, lots of spending on new furniture and curtains. Just when you have settled down, you hear a ‘plop’ from the ceiling, but you reassure yourself and conclude that the roof should be fine.

Then you go to the bathroom and find the water is blocked, and your plumber tells you that to fix the small leak the entire marble flooring has to be removed.

Now things are not so happy, especially when defects in the quality and conditions of a property are discovered after a property has been purchased.  

Defects can be classified into:

Patent – A defect that is, or should reasonably be, easily identifiable upon inspection of the property.

Latent - Defects which only an expert could discover or those that cannot be discovered by an ordinary person during a reasonably thorough inspection.

Faulty geyser, rusted internal pipes, leaking roofs, leaded water, anything which might negatively impact the ownership of your property.

The buyer has no recourse for patent defects, which are visible or obvious without expert inspection.

It is up to the buyer to decide if he wants to proceed or not with the purchase.
However, the seller is absolutely responsible for all latent defects deliberately concealed to induce the buyers; now the seller cannot hide behind the caveat emptor (let the buyers beware) principle.

Liability of the seller before completion of sale

Sec. 55(1)a of the Transfer of property Act 1882 provides that it is the duty of the seller to disclose to the buyer any material defects in the property or in the seller’s title of which the seller is and the buyer is not aware and which the buyer could not ordinary care to discover. In the sale of immovable property, the duty of the seller is only to disclose the latent defects. The seller need not disclose the patent defects.

Remedies available for the buyer?

*Depending on the circumstances, the buyer can

*Cancel the contract, seek damages or claim repayment of a portion of the purchase price, when a latent defect is present, through due process of law.

*Approach the civil court within three years from the date of the discovery of defects

*Approach the consumer court within two years.

*How can the seller protect himself from the liability

*Sellers should compile a list of all defects known to their knowledge and pass it on to their lawyer to be forwarded to the buyers.

This may include problems such as leaking roofs, faulty plumbing and cracked window panes, road construction, developments in the area that may affect and any new housing estates.

*Fix up as many problems as the seller can.

*Discuss the problems with the estate agents and the potential buyers regarding the defects.

Real estate agent’s role

What is the estate agent’s responsibility in terms of the defects?

An estate agent is only obliged to inspect the property for obvious patent defects and to ask the seller as to what known latent defects exist, and then disclose them to the buyer before the agreement is signed.

If this is complied with by the agent, the buyer’s recourse is only against the seller.

If the agent fails to take due care in making enquiries with the seller and fails to disclose, then the buyer can approach the court against both the seller and the estate agent.

How can the buyer protect himself from these problems?

Prevention is better than cure. Thereforem you must ensure that you always get a survey carried out by a qualified surveyor before you purchase the house.

*It is a good idea, to check if the surveyor holds liability insurance.

*Engage a lawyer, who has good knowledge of property law in the area where you are buying.

*Check with many others about the credence of the lawyer before you instruct him. nThe lawyer may also give you good advice of the area and the price.

*Ask the lawyer to provide you with a due diligence report and all documents in respect of planning on the property from the seller.

*Request your lawyers to raise all enquiries in respect of the property by writing to the seller’s lawyer before the contract is exchanged.

*The queries and replies will be very useful record when you have to approach the court later.

*Visit the property at different times of the day and as many times as possible to know more about the property and the area before you sign the contract.

*Take friends and family members to the property to get different views about the property.

*You should always ask the sellers for all warranties and documentation relating to repairs and maintenance on transfer of property.

Take a proper building insurance which covers all the unforeseen problems.
The writer is a lawyer from the Chennai High COurt and a qualified solicitor, UK.
He can be contacted at svsudheer2002@yahoo.com

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