Property Sale and Termites: The Bad Faith Seller Cannot Rely on the Exclusion Clause

Imagine the scene in Mandelieu-la-Napoule: you have just bought a lovely 1980s villa, with a sea view and a Mediterranean garden. The seller gave you a negative termite inspection report, everything seems in order. A few months after moving in, you discover galleries in the beams of the roof terrace. The termites have already caused €30,000 worth of damage. You contact the seller, who relies on the clause excluding liability for apparent defects. What can you do?

I have encountered this situation several times in my practice in Grasse and Mont-de-Marsan. The question is crucial: can a seller who knew his property was infested hide behind an exclusion clause? The answer, given by the Court of Cassation on 13 January 2010 (judgment no. 08-21.677), is clearly no. But you still have to prove the seller's bad faith. Let's look together at what the decision says and how it protects buyers.

This judgment, delivered by the Third Civil Chamber, has considerable practical significance. It reminds us that fraud (fraudulent manoeuvre to deceive the buyer) prevails over any contractual clause. In plain terms, if the seller lied or concealed information, he cannot rely on the exclusion clause. But beware: proof of his knowledge of the defect is essential. Let's break down this landmark decision.

The facts: a story that happens every day

Mr X, owner of a house in Nice, sold his property in 2003. Before the sale, he had a termite inspection carried out by a professional, Mr A. This inspection revealed the presence of termites in certain parts of the house. But the seller did not inform the buyer: he inserted a statement in the sale deed indicating a negative pest status. In addition, the deed contained a clause excluding liability for latent defects, a classic clause in private sales.

The buyer, after moving in, discovered the infestation. He sued the seller for latent defect and fraudulent concealment (intentional concealment of information which, if known, would have prevented the purchase or changed the price). The seller relied on the exclusion clause, arguing that the defect was apparent or that he was not aware of it.

The Court of Appeal ruled in favour of the buyer. It found that the seller was aware of the presence of termites thanks to the inspection carried out by the professional. By inserting a negative statement, he had committed fraudulent concealment. The exclusion clause could therefore not apply. The seller appealed to the Court of Cassation, but the Court dismissed the appeal, upholding the Court of Appeal's judgment.

The reasoning of the court — broken down

The seller argued that the Court of Appeal had not considered whether the conclusions of the professional who carried out the inspection were erroneous or whether the seller had indeed been aware of the defect. In other words, he disputed that the mere fact of having ordered an inspection was sufficient to prove his knowledge.

The Court of Cassation dismissed this argument. It held that the Court of Appeal had independently found that the seller was aware of the presence of termites, and that it did not need to examine the content of the inspection report in more detail. Indeed, once the seller knew (by whatever means) that the property was infested, inserting a contrary statement in the deed constitutes fraudulent concealment. The legal basis is Article 1116 of the Civil Code (fraud), now codified in Articles 1137 et seq., and Article 1643 of the Civil Code (latent defects) which prohibits a seller in bad faith from excluding his liability.

What few people know: the exclusion clause for latent defects is valid in principle, but it does not protect a seller who knew of the defect and did not disclose it. This is an important exception. The courts consider that fraud vitiates consent and invalidates the sale. Consequently, the exclusion clause is deemed unwritten.

In other words, the seller cannot both conceal a defect and rely on a clause that excludes his liability. There is a legal contradiction that the Court of Cassation firmly sanctions. This decision is part of a consistent line of case law: a seller in bad faith cannot hide behind the clauses of the deed.

What this means for you — practically

For buyers: if you discover a defect after the purchase, and you can prove that the seller knew about it (for example, through an earlier inspection report, quotes, or witness statements), you can obtain the annulment of the sale or a reduction in price. Concrete example in Nice: a buyer bought a flat for €250,000 in 2019. A year later, termites were discovered in the woodwork. The seller had had an inspection in 2018 that mentioned an infestation, but he had a new negative inspection done just before the sale. The buyer obtained €40,000 in damages and a reduction in price.

For sellers: you must be absolutely transparent. If you are aware of a defect, even if an official inspection is negative, you must disclose it. undefined, I dealt with a case where a seller in Mandelieu had hidden a termite problem because he thought the negative inspection would protect him. He had to repay €50,000 to the buyer. The exclusion clause is useless if you are in bad faith.

For property professionals: this decision reminds you of the importance of checking the history of inspections. If you advise a seller, make sure he has no knowledge of a previous infestation. An estate agent can be sued for breach of duty to advise if he does not check the consistency of the information.

However, be careful: proving the seller's knowledge is difficult. You need concrete evidence: a previous inspection report, an invoice for treatment, an email. Without this, the exclusion clause applies and the buyer is left with the damage.

Four tips to avoid this type of dispute

• Always have a termite inspection carried out by a certified professional before the sale, even if it is not mandatory in your area. Keep the report without fail.
• If you are a buyer, ask the seller about previous treatments and ask to see any invoices. A simple phone call to the treatment company can reveal information.
• Insert a specific clause in the preliminary sale agreement requiring the seller to declare any knowledge of termites, failing which the exclusion clause is void.
• If in doubt, call in an independent expert for a counter-inspection before the final signing. This costs a few hundred euros but can save thousands of euros in repairs.

Further reading: related case law and developments

The Court of Cassation had already ruled in the same way in a judgment of 13 March 2008 (no. 06-21.786): a seller who knows of the defect and does not disclose it cannot rely on the exclusion clause. More recently, the judgment of 4 May 2017 (no. 16-15.957) extended this principle to apparent defects: if the seller has concealed an apparent defect by camouflage work, he is also in bad faith.

The trend of the courts is therefore very protective of the buyer. Judges do not hesitate to recharacterise exclusion clauses in cases of fraudulent concealment. In the future, it is likely that sellers will have to be even more transparent, particularly with the obligation to provide a termite inspection in risk areas. In Nice and Mandelieu, classified as high-risk zones, this decision is particularly relevant.

Key points to remember

1. A seller who knows of the presence of termites and does not disclose it commits fraud, even if he has a negative inspection report.
2. The exclusion clause for latent defects does not protect a seller in bad faith.
3. Proof of knowledge can be provided by any means (previous inspection report, quotes, witness statements).
4. The buyer can seek annulment of the sale, a reduction in price, or damages.
5. If in doubt, consult a solicitor specialised in property law quickly, as the time limit for action is two years from the discovery of the defect.

Are you in a similar situation? A 30-minute initial consultation with Maître Zakine (€45) can save you months of proceedings — and often much more. Book an appointment →