A few weeks after you take possession, the first heavy rain comes and a stain appears in the corner of the bedroom; according to the tradesman, the roof has been leaking for years, the pipework in the wall has aged, and the waterproofing stopped keeping water out long ago. As a broker, I see that two things get mixed up at this point: the newly taken-out home insurance and the seller's liability. The buyer calls the insurer because “that is exactly why I took it out”, and the insurer rejects the claim because the cause of the damage is a condition that existed before cover began; meanwhile, the weeks go by and notice to the seller is delayed too. This article separates the two routes: when damage to a newly bought home is an insured event, when it is a matter for the seller's statutory warranty for defects (kellékszavatosság), and in what order it is worth acting so that neither option is lost.
- Home insurance pays for sudden and unexpected events that occur after cover begins; a defect that already existed before the purchase – a roof that has been dripping for a long time, a worn-out pipe, slow damp penetration – is not an insured event, even if you have only just noticed it.
- For a defect that already existed before the purchase and could not be recognised at the viewing, the seller is liable under the statutory warranty rules of the Hungarian Civil Code (Ptk.): you can ask for repair, a price reduction or, as a last resort, withdrawal from the contract, and you must notify the seller of the defect without delay after discovering it, in a verifiable way.
- The two routes do not exclude each other: if, because of the old defect, a sudden event – a burst pipe, a storm – now causes damage, the insurer may pay for the damage connected with the event in line with the policy conditions, while the cause of the defect and the condition before the purchase remain a matter between seller and buyer.
What home insurance pays for and what it does not: timing and nature
Home insurance covers events, not the condition of the property. Hungarian policy conditions typically define the insured event as one that occurs during the period of cover, suddenly, unexpectedly and unforeseeably; this has two consequences for the months after a purchase. The first is timing: whatever arose before cover began – even if it has only now come to light – is not the insurer's business, and conditions typically also state this separately as an exclusion. The second is nature: wear and tear, corrosion, lack of maintenance, slow damp penetration and the mould resulting from these are not sudden events but processes, which the exclusions map also lists among the typical items left out. A roof that was already dripping in the seller's time therefore did not cause the leak “as an insured event”. The situation is different if a sudden event turns the old condition into damage: a storm that sweeps the tiles off an already weak roof may fall under storm cover if it qualifies as a storm under the conditions; when an ageing pipe suddenly bursts, escape-of-water cover typically pays for the damage caused by the escaping water, but many sets of conditions pay for replacing the pipe only up to a limit or not at all. The line is drawn by the wording of the conditions, so it is worth reporting the claim and leaving the classification to the insurer – but it is not worth counting on the insurance to “sort out” a defect that existed before the purchase.
Hidden defect: the seller's statutory warranty
The seller is liable for a defect that already existed before the purchase, specifically under the statutory warranty rules of the Hungarian Civil Code (Ptk., Sections 6:159–6:167), which also apply to the sale of real estate. Under Section 6:157 of the Ptk., the seller performs defectively if, at the time of performance, the home does not meet the quality requirements laid down in the contract or by law – but the performance is not defective if the buyer knew, or should have known, of the defect when the contract was concluded. This sentence is the key: defects that were visible at the viewing, described in the contract or noticeable with due care (patent defects) are the buyer's risk, while hidden defects – water damage beneath the floor or wall covering, outdated pipework running in the wall, a crack concealed by plaster – are the seller's. For a used home, according to case law, wear and tear in line with age and use is not in itself a defect; there is defective performance if the defect is unrelated to the home having been used or significantly exceeds natural wear and tear, and this can typically be established by an expert. The statutory warranty is strict liability: it does not require that the seller knew about the defect. The statutory warranty rights follow a sequence: the buyer can primarily ask for repair (or replacement); the buyer may move on to a proportionate reduction of the price, to having the defect repaired themselves at the seller's expense or – for a defect that is not insignificant – to withdrawing from the contract if the seller has not undertaken the repair, cannot carry it out within an appropriate period, or the buyer's interest in the repair has ceased; the costs of fulfilling the warranty obligation are borne by the seller. Two deadlines are decisive: the defect must be notified to the seller without delay after it is discovered, and the buyer is liable for any damage resulting from late notification; and under the Ptk., a statutory warranty claim for real estate becomes time-barred five years after performance. The seller's duty to inform applies on top of this: if the seller knew of the defect and kept quiet about it, the failure to inform at the time the contract was concluded can also be held against them, in addition to the statutory warranty.
“As viewed”: what does the contract exclude, and what not?
Most sale contracts contain the sentence that the buyer purchases the property “in the condition as viewed and known”, and often also that the seller excludes any warranty. Between private individuals, the statutory warranty can be limited, so this clause carries real weight – but it is not unlimited. According to case law, the clause protects the seller with regard to what the buyer could have recognised at the viewing; the exclusion typically does not extend to a defect that the seller knew about and concealed, because under the Ptk. a clause excluding liability for intentional breach of contract is null and void. In a dispute, therefore, three questions are decided: was the defect visible at the viewing, did the seller know about it, and what does the contract's description of the condition contain? This is why, before buying, it is worth asking for a technical inspection by an expert and for a detailed description of the actual condition in the contract (roof, pipes and wiring, insulation, masonry): whatever the contract describes as “in good condition” can be relied on later as well. The contractor's defects liability (jótállás) is a different matter: the mandatory defects liability borne by the contractor for a newly built home is covered in the article on newly built homes; this article is about the liability of the seller of a used home.
The order of steps once the damage has happened
First, mitigating the loss: the water coming in must be caught, the water supply turned off and further damage prevented – under both the policy conditions and the Ptk. this is your obligation, and it also matters for your claim against the seller. Second, documentation: time-stamped photos and a written opinion from the tradesman or an expert on the cause and age of the defect – this decides whether it is an event or a pre-existing condition, and it is the buyer who has to provide this proof. Third, reporting the claim on the insurer's claims line, even if the cause of the damage is probably old: the insurer classifies it on the basis of the conditions, and a rejection letter is also a useful document for the claim against the seller, because it states the cause of the damage. Fourth – and this is where most people are too late – notifying the seller of the defect in writing, in a verifiable way, together with the photos and the expert opinion, before repairs begin, so that the seller can inspect the defect; getting rid of the evidence weakens the buyer's position. Then comes an agreement or the legal route: a statutory warranty dispute is a civil matter decided with the involvement of lawyers and experts and, ultimately, by the court – if your contract also includes legal protection cover, a lawyer paid by the insurer may come into play here. In claims matters, the broker does not represent you or negotiate; the primary route for reporting is the insurer's claims line, and if a case gets stuck or is disputed, I help where I can.
What should you do now?
If you have not bought yet: take a professional with you to the viewing, ask for the condition to be described in the contract, and arrange home insurance to start on the day you take possession – the article on moving house describes the details of continuous cover. If the home is already yours and the defect has come to light: follow the order above and do not mix up the two routes – the insurer answers for the event, the seller for the pre-existing condition. If you get stuck reading the “insured event” and “exclusions” sections of the conditions, I help where I can.
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Sources
- Hungarian Civil Code (Ptk., Act V of 2013) Section 6:157 (defective performance; a defect known or recognisable when the contract was concluded), Sections 6:159–6:167 (statutory warranty: rights, notification of the defect, limitation, bearing of costs)
- Pénzcentrum (19 June 2019): “Get this on paper right now: you could even lose your home over it” – statutory warranty in property sales, defects of used items in the case law of the Kúria (Hungary's Supreme Court) (BH 2012.7.172), notification and the five-year limitation period
- Government Decree 181/2003 (XI. 5.) on mandatory defects liability (jótállás) in residential construction – Section 2 (1): under the construction contract, the defects liability is borne by the contractor; Section 3: 3/5/10 years from the technical handover, the rights may be enforced by the owner of the home
