Latent Defects: Professional Seller Irrebuttably Presumed to Know the Defect

Imagine: you have just bought a house in Biscarrosse, with a view of the lake. Everything seems perfect for a few months. Then, one day, cracks appear on the load-bearing walls. You call in an expert: the ground is unstable, the foundations are inadequate. The seller? A property professional who carried out works before the sale. What to do? This is where the concept of latent defect (a defect not apparent at the time of sale) comes into play. And if the seller is a professional, the law irrebuttably presumes (i.e. without possibility of proving the contrary) that they knew of the defect. The Court of Cassation, in a judgment of 17 January 2024, has just forcefully reminded this.

But what does this actually change for you? This decision clarifies the extent of the professional seller's liability: they must repair all damages caused by the defect, including non-material losses, and cannot hide behind their ignorance. Whether you are a buyer, tenant or professional, this judgment strengthens consumer protection.

In this article, we will break down the facts of the case, the Court's reasoning, and then its practical implications. I will also give you concrete tips to avoid this type of dispute, illustrated with examples from the Mont-de-Marsan area, particularly in Parentis-en-Born.

The facts: a story that happens every day

The case began at the end of the 2000s. Sogedep, a professional property developer, sold a building to STDA, which intended to let it out. The property is located in the jurisdiction of Mont-de-Marsan, typical of recent constructions in suburban areas. A few years after the sale, serious defects appeared: water infiltration, cracks, structural problems. STDA sued Sogedep for latent defects in 2015.

But Sogedep raised the defence of limitation (the time limit after which legal action can no longer be brought). Under French law, an action for latent defects must be brought within two years of the discovery of the defect (Article 1648 of the Civil Code). STDA discovered the first defects in 2013, but only sued in 2015. The Bordeaux Court of Appeal ruled in favour of Sogedep: the action was time-barred.

STDA did not give up. It turned against another professional, the company Sogedep (or perhaps another party, the text is unclear), invoking not the latent defects guarantee, but ordinary contractual liability (Article 1231-1 of the Civil Code, which requires compensation for damage caused by non-performance of a contract). This action is subject to a longer limitation period: five years from the damage. The Court of Appeal also declared this action inadmissible, considering that it was linked to the first by a relationship of dependency.

The case went to the Court of Cassation. It quashed the appeal judgment on this point: the action for ordinary contractual liability is distinct from the action for latent defects. It is not time-barred if it is based on different breaches. The Court referred the case to another Court of Appeal.

But the crucial point for our subject lies elsewhere: the Court reminds that the professional seller is irrebuttably presumed to know the latent defect, which obliges them to repair all damages, without limitation. In short, even if the action for latent defects was time-barred, STDA could act on another basis, and Sogedep could not defend itself by saying "I didn't know".

The reasoning of the court — broken down

The Court of Cassation relies on Article 1645 of the Civil Code, which provides: "If the seller knew of the defects in the thing, they are liable, in addition to restitution of the price they received, for all damages towards the buyer." For the judges, a professional seller is irrebuttably presumed to know the defects in the thing sold. This means that they cannot prove that they were unaware of the defect: the presumption is absolute, with no possibility of contrary proof.

In other words, as soon as the seller is a professional (developer, builder, property dealer, estate agent selling in their own name, etc.), the law considers that they must know the defects of their property. This is a strong protection for the buyer, who does not have to prove the seller's bad faith.

In this case, the Court does not directly rule on the limitation issue, but it restates this principle as a backdrop. What few people know is that this presumption has existed for a long time, but the Court reaffirms it clearly. The judgment confirms well-established case law, not a change. However, it clarifies that the obligation to repair all damages also includes non-material losses (for example, loss of enjoyment, loss of rent).

In practice, for the professional seller, this decision is a warning: they cannot escape liability by claiming ignorance. For the buyer, it is a powerful weapon: they can obtain full compensation, even if the seller is in good faith.

How to react to this decision? If you are a buyer, you must act quickly upon discovering the defect, as limitation periods are short. But if you exceed the two-year period, you may be able to invoke ordinary contractual liability, as STDA did, provided you can prove a distinct breach separate from the mere latent defect.

What this means for you — in practice

For landlord owners like in Parentis-en-Born: if you let a property you bought from a professional and a latent defect appears, you can claim against the seller, even years later. But beware: if you yourself sold the property as a professional, you are presumed to know the defect. Example: a developer sells a unit in a residence in Biscarrosse. The roof leaks. The developer must compensate the buyer, even if they claim they knew nothing.

For buyers: you can claim compensation for all losses, including expert fees, remedial works, loss of property value, and even moral damage. undefined, I have come across cases where the buyer obtained several tens of thousands of euros for latent defects in an old house. If you are in this situation, you must act quickly: have the defect noted by an expert, send a recorded delivery letter to the seller, and consult a lawyer.

For tenants: you are not directly affected by this decision, but if your home has a latent defect, you can take action against your landlord (who may not be a professional). The landlord must guarantee you peaceful enjoyment of the home. If they are a professional, they will be presumed to know the defect.

For property professionals: this decision reminds you that you must be extremely vigilant when selling. Have technical diagnostics carried out before any sale, and mention apparent defects in the deed. Otherwise, you risk being ordered to repair all damages, without limit.

A concrete example: in Parentis-en-Born, an estate agent sells a villa with a swimming pool. A year later, the pool leaks. The cost of repairs is €15,000. The buyer also loses €5,000 in rent if they had planned to let it out. The professional seller will have to pay €20,000, even if they were unaware of the leak.

Four tips to avoid this type of dispute

• Have a complete technical diagnostic carried out before the sale: inspections of pipes, structure, roof, etc. This helps detect defects and mention them in the sale deed, which excludes the latent defects guarantee.
• For the buyer: call in a property expert before buying, especially if the property is more than 10 years old. Expect to pay between €500 and €1,500, but this can save you thousands of euros in unexpected works.
• Keep all documents relating to the maintenance of the property: invoices, maintenance contracts, diagnostic reports. If you are selling, this proves that you acted as a diligent professional.
• If you discover a defect, act without delay: have it noted by a bailiff or court expert, and send a recorded delivery letter to the seller within two years of discovery. If the time limit has passed, explore the possibility of ordinary contractual liability with a lawyer.

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Further reading: related case law and developments

The Court of Cassation has already affirmed this principle on several occasions. For example, in a judgment of 15 May 2019 (No. 18-13.456), it held that a professional seller cannot exonerate themselves from the latent defects guarantee by proving they were not at fault. The irrebuttable presumption of knowledge of the defect is therefore constant.

However, a recent development concerns apparent defects: if the buyer could have discovered them during the viewing, they are not covered. Case law tends to be more demanding on this point: the buyer must be a "knowledgeable professional" for it to be considered that they saw the defect. For example, a developer who buys a building plot cannot complain about an apparent defect such as contaminated soil if they had access to soil studies.

This 2024 decision therefore fits into a line of protection for non-professional buyers. For the future, we can expect the Court to maintain this line, or even extend it to non-professional sellers who behave like professionals (for example, an individual who sells several properties a year).

Key points to remember

FAQ:

What is a latent defect? It is a defect not apparent at the time of sale, which renders the property unfit for its use or reduces its use so much that the buyer would not have bought it (or would have bought it at a lower price) had they known of it.

What are the time limits for taking action? An action for latent defects must be brought within 2 years of the discovery of the defect. An action for ordinary contractual liability has a 5-year limit from the damage.

Can I take action if the seller is an individual? Yes, but the presumption of knowledge of the defect does not apply. You will have to prove that the seller knew of the defect. This is more difficult.

What if I discover a defect after 2 years? Consult a lawyer to check whether you can act on another basis, for example contractual liability for breach of the obligation of conformity or fraud (deception).

What damages can I claim? All direct losses: cost of repairs, loss of value, expert fees, loss of enjoyment, etc.

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