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Purchasing property: Statutory warranty

The seller must, by virtue of law (Sec. 922 Austrian Civil Code (ABGB)), vouch for the fact that the object of purchase is free of defects upon being handed over. No fault is necessary to give rise to an infringement claim once a defect is established. The object of purchase, e.g. a property, has defects if it was not handed over to the purchaser in the contractually agreed state, or if any properties are missing that were personally assured (“guaranteed”) or that are usually assumed. In the case of older buildings, it can sometimes create certain problems to establish what properties are considered to be usually assumed. What is of critical import here is whether, according to general opinion, the particular property can be expected or not. In any event, the purchase price of the property also plays a part in assessing this question. According to the Energy Certificate Exhibition Act 2012, the key energy figures for the building, which can be seen from the energy certificate, are also included in the purchase agreement.

Please note: No rights in regard to warranty claims exist in the case of so-called “obvious defects”. Should defects already be easily discernible when the contract is concluded (e.g. conspicuous plaster damage on the facade of the house), they are usually already taken into account when agreeing the price.

When property is sold privately, however, not in the case of transactions between traders and consumers, rights in regard to warranty claims may be excluded based on the agreement between the parties. The warranty obligations are usually reduced to contractual points explicitly cited. Nevertheless, in spite of an exclusion of warranty, the seller’s liability is upheld in some cases. It cannot be entirely excluded. An example would be if the infringement of disclosure obligations by the seller were to lead to claims for compensation for damage on the part of the purchaser, while fraudulent concealment of defects entitles the purchaser to contest the purchase agreement on the grounds of error due to defects, and also compensation for damage.

Warranty claims which have to be asserted judicially become statute-barred, in the case of moveable items (e.g. any furniture that is covered by the purchase price) after two years; in the case of immoveable items (e.g. the entire building) after three years. Extrajudicial notice of defects within the warranty periods has the effect that, if the seller sues for the purchase price that has not yet been paid in full, the purchaser is entitled to file an objection to the claim. The purchaser may, by way of this objection, object even once the warranty periods have lapsed, and in that way, for example, achieve a reduction in the price.

Pursuant to Sec. 924 Austrian Civil Code (ABGB), it is the case that, in regard to any defects that emerge within six months of the property being handed over, it is presumed that the latter were already present at the time of the property being handed over. Once six months have expired, the purchaser shall bear the burden of proving the latter.

It is essentially the case that the purchaser can initially only require improvement or the exchange of the defective item. The meaning and purpose of this provision is to give the seller a second chance. Should, however, the improvement or exchange fail, the purchaser does not need to give the seller another chance to improve or exchange the item. The purchaser can seek a reduction in price, or even reversal of the contract, as a second step, if the seller has neither exchanged nor improved the item within a reasonable period of time. Even if it is not reasonable for the purchaser to improve or exchange the item, a secondary warranty remedy can be asserted.

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Law Articles - Purchasing property: Statutory warranty