A house is sold in October 2014. The following year a fire breaks out in the closed-hearth fireplace and destroys part of the building. The buyers and their insurer sue the sellers under the hidden defects warranty. The Caen Court of Appeal finds the defect and the sellers’ liability, but caps damages at the market value of the property before its destruction. On 8 January 2026 the Cour de cassation (the French supreme court for civil matters) quashed that ruling: a seller who knew of the defect owes all damages, including the cost of rebuilding a property the buyer chooses to keep. For the valuer, the ruling clearly separates two figures that case files often confuse, market value and the cost of reinstatement.
The facts
By notarial deed of 30 October 2014 a couple sells a house to another couple. In 2015 a fire breaks out in a closed-hearth fireplace and destroys part of the building. After an expert appraisal, the buyers and their insurer, Maif, sue the sellers and their insurers for damages under the hidden defects warranty.
The Caen Court of Appeal, on 11 April 2023, accepts the hidden defect at the origin of the fire and holds the sellers liable, but limits to 170,000 € the damages owed to the buyers’ insurer: the buyers “cannot claim to be compensated, for their material loss, beyond the market value of the property before its destruction”. The buyers and the insurer cross-appeal on that point, arguing that where the seller is bound under article 1645 of the Civil Code, the loss cannot be limited to the market value of the property.
The decision
The third civil chamber quashed the judgment (Cass. 3e civ., 8 January 2026, no. 24-10.636), under article 1645 of the Civil Code: “if the seller knew of the defects of the thing, he is bound, in addition to restitution of the price he received, to all damages towards the buyer”.
It draws the rule: “the seller who knew of the defects of the thing is bound to all damages towards the buyer, who may bring the action for compensation independently of the action for rescission or price reduction”, “in particular to obtain the cost of rebuilding the property, where he has chosen to keep it”, referring to its rulings of 2012, 2015 and 30 January 2020 (no. 19-10.176). By capping compensation at the market value of the property before its destruction, the Court of Appeal breached the provision. Partial quashing, limited to the 170,000 € award, remittal to the Rouen Court of Appeal; the sellers’ insurers are released from the proceedings.
What this changes for valuation
Two actions, two measures. The price-reduction action of article 1644 gives the buyer back part of the price: its measure is the loss of value the defect caused at the date of sale, and it cannot exceed the price. The action for damages under article 1645, open against a seller who knew of the defect, repairs the whole loss: the cost of works or rebuilding, loss of enjoyment, rehousing, expenses. That second measure has no cap, and certainly not the value of the property. A house worth 170,000 € whose rebuilding costs more gives rise to damages above its value.
Why the cap tempted the Court of Appeal. The reasoning comes from insurance law, where the indemnity is often bounded by the value of the insured property, and from the idea that a buyer should not receive more than what was lost. But a buyer who keeps the house has not lost a value, he has to rebuild it; that cost is what repairs, and the Court has said so since 2020. The valuation report therefore does not present market value as a maximum, but as a separate figure.
What the report establishes. Three figures, kept apart. The market value of the property before the loss, with market references of the time, useful if the buyer chose rescission or price reduction, and useful to the judge to place the case. The cost of rebuilding or reinstatement, drawn from quotes and the technical expert’s report, updated to the date of judgment, with, separately, the question of any betterment the rebuilding would bring to an old property, for the judge to decide. The ancillary losses, enjoyment, rehousing, expenses, each with its supporting documents. The site’s glossary distinguishes for that reason valeur de reconstruction, the rebuilding value, from market value: they do not measure the same thing and are not compared.
Knowledge of the defect. A professional seller is presumed to know the defects of the thing; a private seller owes damages only if knowledge is established, for instance by works done on the fireplace, an invoice or a survey. The seller’s status therefore governs the regime: price reduction only, or full compensation. The valuer does not decide that point, but supplies both measures so that the debate is complete whatever basis is retained.
The subrogated insurer. Here Maif had indemnified its policyholders and was exercising their claim. The amount it paid, at new-for-old or after depreciation, does not fix the loss; it is one piece of evidence among others, and the valuation report tests it against the real cost of rebuilding before the court of remittal sets the figure.
What the valuer takes from it
- A seller who knew of the defect owes all damages, including the cost of rebuilding a property that is kept; market value is not a cap.
- The price-reduction action is measured by the loss of value at the date of sale; the action for damages repairs the entire loss.
- The report presents separately market value before the loss, rebuilding cost and ancillary losses.
- Any betterment brought by the rebuilding is quantified separately, for the judge to decide.
- The amount paid by a subrogated insurer does not fix the loss; it is tested against the real cost.
Further reading
The Property loss of value page describes the assignment, its timescale and its fee. The guide I paid too much, can I challenge the price and the glossary entries vice caché and valeur de reconstruction complement this article. On the same theme: Hidden defect: a court appraisal suspends the two-year limit and Hidden defect repaired by a third party: price reduction. The decision is available on Légifrance.
What next
A loss after purchase, a seller who knew, and two figures that do not match?
I establish the market value of the property before the loss and the cost of repairing or rebuilding it, in a report that separates what the price-reduction action covers from what damages cover.
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