Latent defects: buying a home from a bank

Risks of buying a repossessed or second-hand home.

ENQUIRY: Two months ago I bought a repossessed home. The home is 50 years old. We have started the renovation works and discovered that the timber beams and the floor slab are rotten, so major works affecting the structure of the building must be carried out, and the bank that sold it to us did not tell us about this. If we had known, we would not have bought the home.

First, we make sure that the client is still within the 6-month period in order to claim for latent defects, and then we ask the client for a copy of the purchase deed to study how, in this case, the bank sold the home and what clauses it includes.

ANSWER:

In your case, in the light of the purchase deed, it is somewhat “complicated and risky” to claim against the bank for latent defects, since it has “shielded” itself well, as is usual with banks.

Analysing the purchase deed, we see that it states that the seller (the bank) is not aware of the condition and state of the property, but that the buyers (you) are aware of it and accept it, as can be seen in:

“The seller states that, during the period in which it has owned the Property, it has not been used as a home… as a result, it places on record that it is unaware of the condition of its interior installations, which the buyer states that it knows and accepts.”

You, as buyers, are accepting the physical condition of the home, as can be seen in:

“The seller SELLS AND TRANSFERS to the Buyer the ownership and full title to the property, as a specific whole, … in the physical condition… in which it is found…”

You also accept the condition of the home and waive any claim, as can be seen in:

“The buyer acknowledges having visited the Property beforehand and having obtained detailed information about its situation, and knows its state of repair, finishes, floor area and installations, and therefore assumes and accepts all of them. Consequently, the seller assumes no obligation whatsoever to carry out any repairs or works on the Property”

“The buyer expressly waives any claim for manifest or visible defects, since the buyer has visited the Property”

Furthermore, you are accepting that the condition of the home determines its sale price, that any repairs would be deducted from the sale price, and that you also waive any claim, as can be seen in:

“Each and every one of the terms and conditions set out in this clause has been fully taken into account in determining the Purchase Price of the property and, where applicable, deducted from it…. Consequently, the buyer irrevocably waives any claim against the seller arising from the provisions of the preceding Clauses”

In short, as you can see, the bank has covered its back well, and a claim on these terms is a gamble or, at the very least, involves many risks that you should be aware of and accept.