Disclaimer

Disclaimer - A disclaimer is a contractual clause in a real estate purchase agreement through which the seller excludes, in whole or in part, their liability for material defects in the property.

What does a disclaimer of liability mean when buying real estate?

When selling pre-owned real estate, it is common practice to contractually exclude the seller’s liability for material defects. The notarized purchase agreement typically includes wording such as: “The sale is made with the exclusion of any liability for material defects. The buyer has inspected the property and is purchasing it in the condition known to them.” This clause means that the buyer generally accepts the property “as is” - with all apparent and hidden defects.

The disclaimer of liability stems from the nature of pre-owned real estate: In the case of a building that is decades old, not all defects can be foreseen or fully documented. Without the option of a warranty exclusion, many sellers would not be willing to sell a property, as they would otherwise remain liable for undiscovered defects for years after the sale.

However, the law sets clear limits. A liability exclusion does not apply to defects fraudulently concealed. If the seller knowingly conceals a defect of which they are aware-such as mold behind a freshly plastered wall, a damp basement, or soil contamination-they remain liable despite the contractual clause. The burden of proof generally lies with the buyer: They must prove that the seller knew of the defect and knowingly concealed it.

A disclaimer of liability also does not protect the seller in the case of guaranteed characteristics. If the seller has expressly guaranteed certain characteristics in the contract-such as the living area, the year of construction, or the condition of the heating system-and these turn out to be false, the seller remains liable regardless of the exclusion clause.

Special Considerations for Developers and Consumer Protection

An important exception applies when purchasing new-construction properties or renovation projects from a developer. In such cases, a disclaimer of liability is generally invalid, as the buyer, as a consumer, enjoys special protection. The law governing contracts for work and services under the German Civil Code (BGB) provides for a five-year warranty period, which may not be contractually reduced below the statutory minimum duration. Special consumer protection regulations also apply to real estate sales between a commercial seller and a private buyer, which may limit or exclude a complete disclaimer of liability. We recommend that buyers carefully check in every purchase agreement whether the seller is acting as a private individual or commercially, as this results in different rights.

Practical Tip for Property Owners in Nuremberg and Franconia

In the Nuremberg metropolitan region, many existing properties-particularly the typical post-war buildings from the 1950s to the 1970s in neighborhoods such as Langwasser, Schweinau, or Eibach-are sold with a comprehensive disclaimer of liability. Especially for properties built during these years, we strongly recommend that buyers consult an independent building inspector before purchasing. A professional inspection can uncover hidden defects such as moisture in the masonry, hazardous substances in building materials (such as asbestos in older facade panels), or defects in the building services before the purchase agreement is signed.

The expert committee and local appraisers are familiar with the typical weaknesses of Franconian building stock. We assist our clients in correctly interpreting the liability disclaimer in the draft contract and, if necessary, in having specific quality agreements or warranties included in the contract to safeguard important characteristics.

Frequently Asked Questions

Can a buyer claim damages despite a disclaimer of liability?

Yes, if the seller fraudulently concealed a defect. In this case, the disclaimer of liability is invalid, and the buyer may demand damages, a reduction in the purchase price, or, under certain circumstances, even rescission of the purchase agreement. However, the buyer must prove that the seller was aware of the defect and intentionally failed to disclose it. Supporting evidence includes fresh plasterwork, recently replaced paneling, or contradictory statements by the seller.

Does a disclaimer of liability also apply to defects of title?

A disclaimer of liability for material defects generally applies only to the structural condition of the property. Separate regulations apply to legal defects-such as existing residential rights, rights of way, unregistered easements, or outstanding development contributions. In most purchase agreements, the seller expressly warrants that the property is free of legal defects. We recommend having the land register reviewed in full before the purchase and checking for registered encumbrances in Sections II and III.

What should a seller pay attention to regarding the disclaimer of liability?

Sellers should disclose all defects known to them before the contract is concluded-ideally in writing and as an attachment to the purchase agreement. This transparency protects against later allegations of fraudulent intent. This also includes defects that have already been remedied, previous moisture damage, known contamination, or neighborhood disputes. The notary public will incorporate the disclaimer of liability into the contract and advise both parties on its scope.

How does a disclaimer of liability differ from a warranty of quality?

A disclaimer of liability and a warranty of quality are legally distinct instruments. While the disclaimer of liability limits the seller’s liability for defects, the warranty of quality explicitly specifies the specific characteristics that the property possesses or is intended to possess. For example, if the seller agrees in writing that the heating system functions flawlessly and has been maintained over the past five years, this assurance remains valid regardless of any simultaneously agreed-upon disclaimer of liability. In practice, we recommend that buyers have critical characteristics-particularly living space, the year of manufacture of technical systems, the presence of hazardous substances, or known prior damage-formally incorporated into the purchase contract as a warranty of quality. This offers significantly greater legal certainty than an uncommented disclaimer of liability. In Nuremberg and the metropolitan region, we assist with the drafting of such clauses and collaborate with experienced notary offices that are familiar with the relevant contract structures.

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