Buying real estate: how to avoid hidden defects?

13/9/2024

When buying real estate, it's crucial to be well informed about the condition of the property to avoid hidden defects. These often hidden defects can turn a promising investment into a financial nightmare. 

Here's how to identify them and protect yourself effectively.

What is a hidden defect?

A hidden defect is a major fault, not visible at the time of purchase, which renders the property unfit for its intended use or considerably reduces its value. For example,humidity problems, cracks in the walls or faulty electrical installations can be hidden defects.

Case in point: an investor buys an apartment in a historic building. A few months later, he discovers that the building's foundations are unstable, causing dangerous cracks. This defect, which was not visible at the time of the viewing, is a hidden defect. This type of problem can lead to exorbitant repair costs, impacting the profitability of the investment.

Tips to avoid hidden defects

Here are a few strategies to minimize the risk of discovering hidden defects after a real estate purchase.

Professional pre-purchase inspection

  • Call in a certified diagnostician: a building expert is able to spot any anomalies you may be missing. In particular, he can identify signs of damp, structural problems or electrical faults.
  • Ask for a detailed report: insist on a full account of the property's condition, including the smallest details that could influence the buying decision.

Thorough examination of the property

  • Pay attention to every nook and cranny of the property: inspect every detail, from ceiling to floor, not forgetting walls and technical installations. Also check the exterior of the property, including roofs and facades.
  • Test the property's systems: make sure that the heating, plumbing and electrical systems are working properly. We also recommend checking the gas and ventilation systems.

Request the required documents

  • Consult the mandatory diagnostics: the seller must provide technical diagnostics, particularly forasbestos, lead and termites. These documents are essential for assessing the actual condition of the property.
  • Ask for a history of the work: if renovations have been carried out, ask for a complete history of the work to see if any hidden defects have been corrected.

Suspect prices that are too attractive

  • Beware of offers that are too good to be true: a price well below the market may indicate undisclosed problems. Compare prices with other similar properties in the same area to detect any anomalies.
  • Evaluate potential repair costs: if the property requires work, estimate the cost of these repairs before committing yourself. A hidden defect could make these costs much higher than anticipated.

What should I do if I discover a hidden defect?

If, despite all your precautions, you discover a hidden defect after the purchase, here are the steps to take to protect your interests.

React without delay

  • Contact the seller immediately: inform him in writing of the discovery of the hidden defect. You have two years after discovery to take legal action.
  • Get a professional appraisal: hire an expert to assess the extent of the problem. This report will be crucial for any legal action or negotiation with the seller.

Possible solutions for real estate investors

  • Negotiate the price: if repairs are feasible, negotiate a reduction in the purchase price proportionate to the cost of the necessary work. This preserves the profitability of your investment.

  • Cancellation of the sale: if the defect renders the goods unfit for use, ask for the sale to be cancelled, with full reimbursement and compensation for costs incurred.

  • Strategic exploitation of the property: consider reorienting the use of the property (seasonal rental, quick resale) to minimize losses and potentially generate a gain despite the defect.

  • Use of legal warranties: check whether warranties such as the ten-year warranty or specific insurance can cover repair costs. This can limit the financial impact on your cash flow.

Protect your real estate investment against hidden defects

Buying real estate is a complex process that requires extra vigilance, especially to avoid hidden defects. By following the advice above, you'll increase your chances of making a profitable investment with no unpleasant surprises. Take the time to inspect the property thoroughly, request the necessary documents and don't hesitate to call in qualified professionals.

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