Liability for Defects

Liability for defects refers to the legal obligation of the seller, developer, or contractor to be held liable for defects in a property or construction work-through repair, reduction of the purchase price, compensation for damages, or rescission of the contract. In real estate purchases, it is governed by Sections 434 et seq. of the German Civil Code (BGB) (material defects) and Section 438 BGB (statute of limitations); in construction contracts, it is governed by Sections 634 et seq. BGB. Liability for defects is mandatory consumer law and cannot simply be excluded when purchasing a new-construction apartment or in construction contracts.

Liability for Defects in Real Estate Purchases

When purchasing a pre-owned property between private individuals, liability for material defects is typically excluded in the purchase contract-“sold as is.” This exclusion is valid provided the seller has not fraudulently concealed any defects. Fraudulent concealment (Section 444 BGB) requires that the seller was aware of the defect and deliberately concealed it. In this case, the seller bears unlimited liability, regardless of any contractual exclusion.

When purchasing a new-construction property from a developer, the statutory warranty period of 5 years from acceptance applies; a complete exclusion is not possible here. The developer is obligated to remedy, at their own expense, all defects that arise within this period and were already present at the time of acceptance. This also applies to hidden defects (so-called latent defects) that only become apparent after acceptance.

Liability for Defects in Construction Contracts and the Law Governing Contracts for Work and Services

When owners enter into contractor or construction contracts, the provisions of the law governing contracts for work and services apply (Sections 631 et seq. of the German Civil Code [BGB]). After acceptance of the construction work, the contractor is liable for defects that were present at the time of acceptance or that become apparent within the warranty period. The statutory warranty period is 5 years for construction work on a building and 2 years for simple work services.

Important: Acceptance is the cut-off date-defects that were known prior to acceptance and were not reserved cannot be claimed after acceptance. Never accept without a written acceptance report. The report should detail all obvious defects; for hidden defects, the obligation to give notice applies within a reasonable period after discovery. Anyone who signs an acceptance report without reservations forfeits their rights regarding all visible defects.

Types of Defects and Their Relevance

Defect liability law distinguishes between obvious defects (visible at acceptance), hidden defects (only recognizable after acceptance), and defects fraudulently concealed. In the case of obvious defects, immediate notification upon acceptance is crucial. Hidden defects can be claimed until the expiration of the warranty period, as soon as they are discovered. Fraudulently concealed defects are subject to a separate statute of limitations (3 years from discovery) and entitle the buyer to compensation for damages.

Examples of hidden defects in the real estate sector include: moisture damage in the basement behind paneling, mold under new plaster, structural defects in the construction, outdated and non-compliant electrical installations, as well as hidden hazardous substances (asbestos, PCBs, heavy metals).

Practical Tip for Property Owners in Nuremberg and Franconia

When purchasing an older building in Nuremberg or Franconia, we always recommend consulting a building inspector for an inspection before signing the contract. Defects identified and documented in the report can be factored into the purchase price; unknown defects that were fraudulently concealed may lead to renegotiation after the purchase. We work with experienced experts from the region and are happy to put you in touch with them.

For sellers, the following applies: The duty to disclose takes precedence. Known defects must be disclosed to the buyer-even if no liability exclusion has been agreed upon. Anyone who provides false information upon request is liable without limitation for fraudulent misrepresentation, even if the purchase contract contains a liability exclusion clause.

Frequently Asked Questions

How long does the warranty for defects apply when purchasing a new-construction apartment?

When purchasing a new-construction apartment from a developer, the statutory warranty period is 5 years from the date of acceptance of the common property or the individual residential unit. Within this period, the developer must remedy defects at their own expense.

Can the seller completely exclude liability for defects when selling a pre-owned apartment?

Yes, in contracts between private individuals, a complete exclusion of liability for material defects is common and valid-except in cases of fraudulently concealed defects. If the seller is aware of a hidden defect (e.g., moisture in the basement) and conceals it, they remain liable despite the exclusion clause.

What should I do if hidden defects appear after purchasing a house?

First, secure evidence (photos, expert reports). Check whether the defect already existed at the time of purchase and whether the seller was aware of it. If you suspect a defect, you should quickly consult a specialist attorney for construction law or real estate law, as statutes of limitations apply.

What is the difference between liability for defects and a warranty?

Liability for defects is a legally mandated obligation of the seller. A warranty goes beyond this and is a voluntary commitment by the manufacturer or seller that applies independently of the statutory warranty. In the real estate sector, warranties primarily play a role with regard to building products (e.g., windows, heating systems).

What rights do I have if the developer refuses to remedy the defect or delays doing so?

If a developer refuses to remedy a reported defect within the specified timeframe, the buyer has several legal options available. First, a written notice setting a grace period with a specific date should be issued-at least two to four weeks, depending on the severity of the defect. If this period expires without resolution, the buyer may have the defect remedied at the developer’s expense (self-remediation) or reduce the purchase price. In the case of significant defects, withdrawal from the purchase contract is also possible, though this must meet strict requirements. In addition, there is a claim for damages for all consequential costs arising from the defect (e.g., hotel costs if the apartment is unusable, loss of rent). In Nuremberg, we recommend consulting a lawyer specializing in construction law at an early stage if defect rectification proceedings are stalling, as statutes of limitations and deadlines for self-remediation must be strictly adhered to.

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