Warranties on real property

For investors in real property sector it is essential to be acknowledged also of warranties that would cover possible replacements or repairments after the completion of a transfer process, if necessary. Also it is important to understand what does the warranty covers, how and when to make a claim in case certain defect occurs and what is the length of the warranty period.

Conditions of real property warranties in the Slovak republic depend on the (i) type of the transfer agreement on basis of which the property was acquired, (ii) the age of the property and (iii) character of defects of property.

Newly built property

In case of newly constructed property built according to investor’s order, the constructor of the property has to provide for the construction itself the warranty in lengths of 3 years at minimum. There are also various parts of the construction as manufacturers or building material warranties provided through the constructor but given directly by the respective manufacturers such as appliances, roofing, siding, windows, etc. In such a case it is important to secure that the constructor transfers all rights resulting from these warranties on investor and provides him with all relevant documentation. The warranty period for these parts of the construction may not be shorter then 18 months.

The warranty period starts to flow on the date of take over of the apartment. The constructor is liable for (i) any defects of property known at the time of property takeover and (ii) for the defects that will occur during the warranty period.

Prior to signing of a takeover protocol it is advisable to make a property inspection in order to check on any actual defects. These should be written down into the protocol and repaired by the constructor within an agreed period. Defects of property that occur during the warranty period shall investor claim with the constructor with no delay after their detection. In respect of the character of the detected defects, the constructor has several possibilities how to handle with the claims.

Provided that the defect is repairable, the constructor is obliged to repair it with no delay. In case of an un-repairable defect that does not limit use of the property, the investor may request an adequate discount from a purchase price for which the property was acquired. In case of an un-repairable defect disabling use of the property, the investor is entitled to withdraw from a transfer contract. From practical point of view this means that contractual parties should mutually return all already paid payments.

Older property

The conditions of warranty covering the replacement or repairment of defects differ in case of purchase of the older property,

Prior to closing, the transferor is obliged to warn the acquirer on all known defects lying on the property. Transferor shall bear no liability for defects of which the purchase was acknowledged. The warranty covers any defects occurred after the takeover of the property regardless whether transferor was aware of the defects or not.  In order to secure the possibility of claiming the right from the transferor’s liability for defects at a court, the acquirer must in the first instance claim the defects with the transferor. The period in which he can claim the defects is limited to 12 months after the apartment has been taken over.

Similarly as in the case of newly built properties, possibility of claiming the defects depends on their character. In case of occurrence of the defect, on which the acquirer was not warned but such defect existed at the time of transfer, investor is entitled for adequate discount from the purchase price. Provided that due to the defect, the property can not be used for designed purpose, acquirer is entitled to withdraw from the agreement. He is entitled to withdraw from the agreement also in the case, when transferor assured the acquirer on certain characters of property explicitly required despite the property does not meet these requirements or in case that transferor assured the acquirer that property has no defects at all.

In case of purchase of the property, the transferor bears no liability for the defects that shall occur after the property is transferred.

Besides the possibility of claiming a right from the transferor’s liability for defects, acquirer is also entitled to claim:

-        compensation of all his expenses incurred as a consequence of defect or warranty repair,

-        for an indemnification.

With regard to number of different conditions, lengths of warranty periods as well as requirements for claiming the defects, the well versed attorney should assist to secure clear and univocal warranty clauses in the acquisition contract or help to determine if the acquirer have any grounds for recovery.