Defects in a second-hand apartment: when you can sue the seller

Is there an "inspection year" for a second-hand apartment?

No. The inspection and warranty periods under the Sale (Apartments) Law are intended for new apartments bought from a contractor. In a second-hand apartment, the seller's liability is determined by the general Sale Law, by the agreement signed, and by the law of contracts.

What is a non-conformity under the Sale Law?

Section 11 of the Sale Law lists cases in which the seller has not fulfilled its obligation, including delivery of a property that lacks the qualities required for its ordinary use, or the qualities agreed upon. Hidden damp in the walls, defective plumbing or an unlawful building addition may constitute a non-conformity, depending on the circumstances and on what was said during the negotiations.

I bought the apartment "as is". Have I lost my rights?

Not necessarily. An AS IS clause means that the buyer accepts what is visible or known to him. It does not cover a defect that the seller knew about and concealed. Under the Sale Law, a seller cannot rely on the defences in the Law where the non-conformity relates to facts which the seller knew of and did not disclose to the buyer. Section 16 of the Sale Law provides that in such a case the buyer is entitled to rely on the non-conformity notwithstanding anything in any agreement, provided that he notified the seller immediately after discovering it. In CA 8068/11 Eini v. Shifris (11.2.2014), the Supreme Court dismissed an appeal by sellers who had not disclosed building irregularities in the house they sold. It was held that the buyers had been entitled to rescind the transaction and recover their money, even though they had declared in the contract that they had inspected the property. In later case law, the judgment has been cited as authority that Section 16 is mandatory, meaning that it cannot be contracted out of in advance. And in CC (Tel Aviv Magistrates' Court) 49613-08-15 Klein v. Hagai (2020), a seller was ordered to pay damages for hidden damp that she had not disclosed, even though the apartment was sold AS IS.

The buyer's duty: inspection and notice

The Sale Law requires the buyer to inspect the property, and to notify the seller of a non-conformity that could not have been discovered on inspection immediately after discovering it. This is provided by Sections 13 and 14 of the Sale Law, and a buyer who has not given such notice is not entitled to rely on the non-conformity. Where the non-conformity was hidden and could not be discovered on a reasonable inspection, Section 15 permits reliance on it, provided that notice was sent immediately after discovery. And Section 12 adds that a buyer who knew of the non-conformity when the contract was signed cannot rely on it.

In practice this means two things. Before signing, it is advisable to commission a home inspection, particularly in an older apartment. And after delivery, when a defect is discovered, send the seller written notice immediately, rather than waiting until the end of the renovation.

The seller's duty of disclosure and misrepresentation

Section 12 of the Contracts (General Part) Law, 5733-1973, requires negotiations to be conducted in good faith. Section 15 of the same Law allows a contract entered into as a result of misrepresentation to be rescinded, and misrepresentation includes non-disclosure of facts which the seller was obliged to disclose. In most cases the buyer does not seek rescission, but rather compensation in the amount of the cost of repair or the loss of value.

In a case in which we represented a buyer who discovered damp that the sellers had not disclosed (CC 39219-10-20, Tel Aviv District Court), the proceedings ended in an arrangement under which the repair was carried out at the sellers' expense and under expert supervision. Every case is examined on its own facts. The story of the case appears on the dira-law website, in the article The seller concealed damp.

And what happens if I have already carried out the repair myself?

A repair carried out before the seller has received notice and an opportunity to inspect makes proof more difficult. The defect is no longer visible, and the seller will argue that it was not serious. So document first: photographs and, where possible, an engineer's opinion, and only then carry out the repair. Where the repair is urgent, notify the seller in writing before the works and offer to let him send a representative.

What should you do when a defect is discovered after delivery?

• Photograph the defect and record the date on which it was discovered.
• Send the seller written notice, describing the defect and requesting an inspection.
• Check the agreement: the AS IS clause, the seller's declarations and any special undertakings.
• Commission an engineer's opinion before any repair that will hide the defect from view.
• Check the timetable against prescription.

About the author

Amos Ilan, Advocate, is a lawyer (Bar No. 35320) and a notary (licence 214444). The office is at 17 Tzahal Street, Nes Ziona, and handles real estate transactions, construction defects, condominium disputes and civil litigation. Alongside his legal work he has practical knowledge, not based on formal training, of engineering, appraisal and electrical and building systems, and he personally conducts the cross-examination of experts in construction defects cases.