Shortly after you move in, one wall turns out to be damp, with signs of rising damp. You wonder whether this defect counts as a hidden defect (vice caché), whether the seller has to compensate you, and how to put a figure on the loss of value. A decision of the PARIS Court of Appeal of 2 February 2018 answers in two steps: first the seriousness of the defect, then the comparison between the price paid and the value of the property at the date of sale.
The facts
Mrs Z. buys a five-room ground-floor flat for €840,000. The wall of one bedroom is damp from top to bottom, because of rising damp from the courtyard of the building. She sues the seller under the hidden defects warranty.
A hidden defect must be a serious defect
Article 1641 of the French Civil Code defines a hidden defect as one that makes the property “unfit for its intended use”, or that reduces this use so much that the buyer would not have bought it, or would have paid less for it, had they known. The defect must also be hidden: apparent defects, which the buyer could have discovered for themselves, are not covered (article 1642). The claim must be brought within two years of discovering the defect (article 1648).
Here the Court finds the defect “minor”: the flat remained inhabited and the work to be done amounts to “redecoration”. The seriousness required by article 1641 is not reached. This first finding alone is enough to rule out the warranty.
Did the price paid already reflect the defect?
The Court then turns to the question of value, and this is where the decision becomes instructive for the valuer.
The seller’s lawyer commissioned a property valuation. The report concludes that Mrs Z. bought her flat 3 % below the market price at the date of sale, roughly €25,200 less than its market value. According to the seller, this gap was margin enough to deal with the damp problem.
Mrs Z., for her part, claims that the flat has lost 20 % of its value, or €168,000. She produces no valuation to support this figure.
Finally, the Court notes that the problem was solved by works voted by the co-owners’ association (copropriété), and that Mrs Z.’s share came to €3,529. The arithmetic is then simple: with a €25,200 discount at purchase and a €3,529 outlay, the balance remains in the buyer’s favour by about €21,700.
Mrs Z. also claims a rental, material and moral loss. Without supporting documents, the Court cannot award it.
What the decision teaches
Proof comes from a report
A percentage loss of value asserted without demonstration does not convince a court, especially when the other side produces an expert report. The Charte de l’expertise en évaluation immobilière (the French property valuation charter, 6th edition, Title I, §1.1) distinguishes the opinion of value, which states a value without demonstration, from the valuation report, which justifies it by a method and engages its author’s liability. The judge expects the second document.
Value is assessed at the date of sale
To establish a loss linked to a defect, one must determine the market value of the property on the day of purchase, taking the defect into account, and compare it with the price paid. If the property was bought below the market price, the judge will most likely consider that the price already reflected the defect. The method is the comparison approach: analysis of recent sales of similar properties, adjusted for their differences (Charte, Title III, §2.1). The defect is one of these adjustments, measured by the cost of the works or by a discount observed on the market.
Proportion matters
The judges noted how moderate the loss was, both materially and financially, compared with the price and the proceedings brought. A claim based on a defect remedied for €3,529 in a €840,000 property has little chance of success, whatever the inconvenience suffered.
For the buyer: what to do about a damp wall
- Have the problem recorded quickly, by a building professional or a survey, and notify the seller in writing; the two-year period of article 1648 runs from discovery.
- Find the cause and its extent: rising damp, water ingress, condensation. Seriousness, and therefore whether the defect qualifies as hidden, depends on it.
- Cost the works and check whether they fall to the co-owners’ association, as here, or to your private lot.
- Have the market value established at the date of sale, with and without the defect. This gap, not a general percentage, is the compensable loss.
In Mrs Z.’s case, a valuation carried out before issuing proceedings would have shown that the price paid was below the market, and avoided a case with no favourable outcome. The price index for existing homes in the Paris region has moreover risen since her purchase, which puts the alleged loss into perspective.
Further reading
The Property loss of value page describes the assignment of measuring a loss of value linked to a defect. Two articles on the same theme complete this one: septic system and hidden defect and claiming loss of enjoyment and the devaluation of your property.
What next
Has your property lost value because of a third party?
Neighbouring construction, hidden defect, wrong floor area, overpayment at purchase: the loss of value and the loss of enjoyment quantified with the method accepted by French courts.
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