Hidden fault in a condominium?
Fel i lägenhet:
I bought an apartment for SEK 2.1 million in 2018 and sold it for SEK 2.3 million in 2020. Now the buyer thinks there are some hidden faults in the toilet and claims compensation for 130,000 SEK in January 2022.
This apartment had a small toilet and was renovated by the previous owner before we bought it. The buyer made an inspection after moving in and found that the renovation of the toilet was not up to standard. So a lawyer was hired and we were asked to pay SEK 130,000.
I also hired a lawyer and she contacted the inspector to check whether it is an undetectable error. The inspector replied that the buyer cannot find the errors by himself but they can be found by an inspector easily. She also investigated some precedents and find that if the loss is greater than 4-5% of the price then it will be regarded as an exception of the existing condition according to a precedent of The supreme court and the court of Appeals. So she suggested making an agreement with the opponent. I have asked for a detailed receipt from the buyer but he said the renovation is still ongoing so the negotiation has been suspended.
My questions are as follows:
1 what are the criteria of an undetectable error. Is it a must for the buyer to have a professional inspection before buying?
2 How likely will I lose if it goes to court?
3 Do you agree with the suggestion of my lawyer?
4 Is there anything I can do next?
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Swedish law distinguishes between property (fast egendom) and other objects (lös egendom). Since you have bought an apartment I assume this is a condominium, which would fall under "other objects".
The law regulating a transaction between regular persons is köplagen (1990:931), KöpL.
Hidden faults, undetectable errors
The concept of hidden faults is a result of KöpL 20§. Therein is stated that the buyer cannot invoke faults that he should have noticed when inspecting the object.
The law assumes that there was actual inspection held. If no inspection was held the buyer does not lose his right to invoke faults. Judging by precedent, it is not clear that a regular viewing of a condominium counts as an inspection (NJA 2020 s 951, which is very similar to this case). It is further not certain that even if it counts as an inspection, the buyer would have any further obligation to inspect the condominium than to just notice obvious and easily detectable faults.
From this I'd like to characterize an "undetectable error" as anything not reasonably easily noticed when inspecting the condominium to the extent that the state of it gave reason for. To exemplify I'd say that a larger crack in bathroom tiling probably would count as a detectable fault, but nonexistent water proofing behind the tiles would not. It should be noted that the more thorough inspection that is required when buying property can't be used as an analogue when it comes to other objects, such as a condominium.
The 3-4% rule
What your lawyer is referring to is the precedent set in NJA 2019 s 807 where it was established that a loss in value, as compared to the assumed value, of less than 3% does not count as an essential fault. For this precedent to be applicable it is required that the condominium was sold under "current condition", as only this triggers the requirement that the fault be essential.
The two-year rule
Faults that aren't invoked within two years from the purchase cannot be invoked at all (KöpL 32 §). It seems like this isn't the case, but since i don't know when during 2020 the condominium was sold, I can't be certain.
The likelihood of losing in court
Since I don't have any in-depth knowledge of the circumstances, I can't say what chances in court would look like. Just judging by what I know I'd say there is a real risk of losing. I therefore agree with your lawyer that some type of agreement is probably the best option.
What to do?
If negotiations are halted there is not much you can do at this point. My recommendation would be to wait for the buyer to complete the renovation and take it from there. Also, I'd make sure the buyer specified the costs of the renovation. Any claim from the buyer is limited to fixes, not improvements. If the buyer has made the bathroom have a higher standard than when it was bought, you should not pay for the improvement.
Since you have bought the 30 minutes follow-up, I suggest I call you on Monday Mars the 14th at 11.00. I'll be calling from a hidden number. If some other time would suit you better, or if you have any further questions, please send me an email. My address is email@example.com.