It is important to comply with these duties, or you could be in big trouble
When you sell a house, you have a duty of disclosure. When you buy a house, you have a duty to investigate. But what exactly do these terms mean? Robert van Ewijk of AMS lawyers, specializing in real estate law, explains them. “These terms were created to prevent problems.
Van Ewijk: “Actually, the word duty to investigate says it all. If you buy a house, then it is your duty to examine that house. If something looks bad – for example, a beam looks rotten – you have to carefully insert a screwdriver there to see if it really is. And possibly investigate further. If a building is leaning, that is reason to think that something is wrong with the foundation, and then it is your duty to investigate.’ But, says Van Ewijk, “The duty of disclosure comes before the duty to investigate. Something you don’t know, you can’t report. But everything you do know, you must report. Things that are not in order in your property, you have to inform the buyer about that.’
The consequences of violating your duty of disclosure, can be “quite severe,” Van Ewijk said. ‘If you know something and you don’t report it, you’re screwed if it’s discovered. Then the buyer can hold you liable for what we used to call “hidden defects. Nowadays we speak of nonconformity.
On the other hand, if you “violate” your duty to investigate (i.e., fail to properly research your purchase) as van Ewijk puts it in legal terms, you can no longer invoke that liability as a buyer. ‘Sometimes the question is what is whose duty. For example: the seller knows that the foundation once subsided, and reports this – and also that the cracks were neatly repaired. If there is then later a problem with the foundation, and the buyer wants to hold the seller liable for that, then you as the seller can say: I said what I knew. Then you should have had the foundation examined better yourself.’
Rights and duties
Bottomline is that the terms were created to prevent problems. ‘If I sell you a car with four flat tires, you can tell. But if fifth gear doesn’t work, and you’re just driving around town, you can mask that. But you’re not allowed to. You’re not allowed to fib – and not conceal anything that the buyer is supposed to know.’
Nowadays, due to the pressure on the housing market, both duties are not always well met. ‘In Amsterdam the heyday of the housing market is reviving: there are sometimes queues in front of the doors during viewings. Sometimes when people are watching at the top of a property, another real estate agent on the sidewalk is already telling other visitors: if you want the house, you have to make an offer now. And sometimes an offer is actually made. Without financial reservations, without technical inspections. So then you don’t fulfill that duty of inquiry. Then later, if you find defects, it could be difficult to invoke anything. It could lead to big problems. Because once a contract is concluded without a financing reservation, then you can still get rid of it as a buyer for the first three days, but after that, no more!