Duty to investigate and duty of disclosure when purchasing residential or commercial property

If you buy an immovable property such as a home or business premises, you have a duty to examine the property properly. You have this duty twice: first at the time of purchase, then again upon transfer. The buyer's duty of investigation is offset by the seller's duty of disclosure. The seller must tell what he knows about the property and what he understands or should understand is important for the buyer to know.

Buyer's duty of inquiry

The duty to investigate means that the buyer of a property, such as a house, must investigate the condition of the property and any defects. The buyer can only expect a certain property if he does not have to doubt its presence. Thus, if there is any doubt, the buyer has a duty to conduct research by, for example, asking questions of the seller or by viewing the house. If the buyer knew or could reasonably have known of a defect during the conclusion of the contract, he may not be able to rely on the fact that the property does not conform to the contract.

For example, if he sees that the house is sagging and the facade is cracked, the buyer has a duty to ask questions about the state of the foundation. If he does not, he cannot later object to the seller that there is hidden defects.

Seller's duty of disclosure

The duty to disclose means that the seller is obliged to inform the buyer of any defects or discrepancies in the real estate. The seller's obligation to provide information to the buyer is especially important if the defect could affect the value of the property or the buyer's decision whether or not to actually buy the property. If the seller knows that there is a defect in the foundation, he is obliged to disclose it to the buyer. Breach of the duty to disclose can not only lead to non-conformity, but is under circumstances even a wrongful act.

Duty to investigate versus duty to disclose: which takes precedence?

The buyer's obligation to investigate and the seller's obligation to disclose are communicating vessels. If the seller provides information about certain characteristics of the property sold, the buyer may assume that this information is correct. He no longer needs to conduct his own investigation. Furthermore, if the buyer did not conduct an investigation when the seller should have spoken, the seller cannot hold against the buyer the violation of the obligation to investigate. In other words, the duty to disclose takes precedence over the duty to investigate. Going back to the example about the foundation: if the buyer should have investigated in view of the observed cracking but failed to do so, the starting point is that he cannot hold against the seller that there was hidden defects. But if the seller was silent and knew that the cracking was structural and the result of a faulty foundation, then the seller should have warned the buyer. If the seller fails to do so, the buyer can still claim non-conformity.

Lawyer on duty to investigate and duty to disclose

The duties of investigation and disclosure play a crucial role in real estate law. It is important that both parties comply with these duties to ensure a proper and transparent real estate transaction. When in doubt as to whether the obligation to investigate or the obligation to disclose have been violated (or perhaps both) and what the consequences are, you can contact the lawyer at Lexys Advocaten. They can tell you more about the obligations of the buyer and the seller.