HIDDEN DEFECTS IN RENOVATION PROJECTS INCLUDE DAMAGE TO COMMON AREAS

Hidden Issues in Home Sales

Article 1484 et seq. of the Civil Code establish the seller's liability to the buyer for the hidden flaws in the item sold. These defects may render the item unsuitable for use or reduce its value to such an extent that, had the buyer been aware of them, the buyer would not have purchased it or would have paid a lower price for it.

REMEDIATION OF HIDDEN DEFECTS INCLUDES DAMAGE TO COMMON AREAS

The Civil Code provides for this obligation of the seller to be liable for hidden defects in the item sold that existed at the time of the sale and were unknown to the buyer.

Conditions for Filing a Claim for Hidden Defects

Provided that any hidden defects come to light within 6 months of the sale, the buyer may exercise the right to file a claim within that period.

In these cases, the law gives you two options. First, you may choose to rescind the sale, which will result in the return of what was delivered between the parties.

In addition, you may also request a reduction in the purchase price in an amount equivalent to the hidden defect or latent defect that has been reported.

If these principles and their implications are clear, we would like to address in this article the question that arises when the hidden defect is not found in the specific unit being sold, but rather in a common area of the building where the unit is located, under a condominium ownership regime.

In other words, what happens if, in the sale of a home or commercial property, damage is found in a common area rather than in the specific home or commercial property itself?.

THE COMMON ELEMENT AS AN INSEPARABLE PART OF PRIVATE PROPERTY IN CONDOMINIUM PROPERTY

Article 3 of the LPH provides that, under the ownership regime established in Article 396 of the Civil Code, each apartment or commercial space is entitled to:

a) The unique and exclusive right of ownership over a sufficiently defined space that can be used independently, including all architectural elements and facilities of every kind—whether visible or not—that are located within its boundaries and serve exclusively the owner, as well as the right to any annexes expressly identified in the title, even if they are located outside the defined area.
b) Joint ownership, together with the other owners of apartments or commercial spaces, of the remaining common elements, property, and services.

The basis for this provision is found in Article 396 of the Civil Code, which provides that

“The various floors or units of a building, or those parts thereof that may be used independently because they have their own access to a common area of the building or to a public thoroughfare, may be subject to separate ownership, which shall inherently include a right of co-ownership over the common areas of the building—that is, all those necessary for its proper use and enjoyment….”

Implications of Co-Ownership Regarding Hidden Defects

Consequently, the owner of an apartment or commercial space is not only the owner of that property but also a co-owner of the common areas; therefore, any problem or construction defect in those common areas that arises within 6 months of the sale will be treated as a latent defect.

APPLICATION OF HIDDEN DEFECTS TO COMMON ELEMENTS

This issue has been addressed in numerous court rulings, and there is a clear line of case law from the Supreme Court.

Legal Basis and Supreme Court Doctrine

The basis for these remedies lies in the fact that the price set for a sale depends directly on the quality of the item being purchased. It is essential that the buyer be able to examine the property in detail before making a decision.

If the buyer based his or her decision on a perception that, with reasonable diligence, differed from reality, the existence of a hidden vice. Consequently, you will have the right to rescind the contract or request a price reduction, adjusted to reflect the actual condition of the property and its impact on the market.

This mechanism is not intended to provide compensation for damages suffered, but rather to ensure economic balance in the sales contract. Its primary purpose is to protect the buyer against hidden defects that affect the value of the property.

The seller’s legal responsibility for maintenance of a residential unit in a building subject to the condominium regime is not limited solely to the exclusive-use areas. It also extends to the common areas of the building, since these form part of the «property sold» and include the corresponding share in those areas.

There is no disagreement whatsoever regarding the existence of hidden flaws that directly affect the building's common areas: a wood-boring insect infestation in the floor joists; and the presence of rodents in the drop ceiling.

Consequences of Hidden Defects in Condominium Properties

This circumstance, however, cannot exempt a party from legal liability for remediation due to hidden flaws to the seller. Such defects also indirectly affect the ordinary use of the item sold, impacting its functionality and livability.

Furthermore, when it comes to a dwelling unit located in a building governed by condominium regulations, the «subject matter of the sale» is not limited solely to the private elements of that dwelling unit. It also includes the right of co-ownership of the common elements essential to its use and enjoyment.

These elements include ceilings, beams, overhangs, and other structural components. These jointly owned parts cannot be divided and may only be sold, encumbered, or seized together with the exclusive portion of which they form an inseparable part.

REQUIREMENTS FOR THE EXISTENCE OF SUCH LIABILITY

When it comes to older buildings, more and more cautious buyers are making sure to check the condition of the building itself—and not just the specific unit they wish to purchase—before making a purchase.

The Importance of Inspecting the Condition of the Building

We must remember the need for a… for buildings over 50 years old; this document can be reviewed by the buyer and provides guidance on the condition of the property.

However, this is not truly conclusive because, for various reasons, it may fail to identify any hidden defects that may exist, and this does not exempt the seller from liability.

We consider it important to take into account any knowledge or lack of knowledge the buyer may have had regarding the building’s previous condition, as reflected in the minutes of meetings or in the certification issued by the community manager.

We always ask our clients to verify this by requesting that the property manager provide not only proof of the property’s debt status but also confirmation that there are no such debts.

It is also important for the buyer to request copies of the minutes from recent years to determine whether there are any issues within the homeowners’ association regarding common areas, as these minutes may reveal the existence of problems that, if brought to the buyer’s attention, would preclude a claim of hidden defects.

CALCULATION OF COMPENSATION

Remedial action may consist of rescinding the sale or a proportional reduction in the price.

Supreme Court case law has emphasized that when the objective is to reduce the value, the action q«It is not intended to provide compensation, but rather to restore contractual equity.» , so that If this action is brought, the only relief available is a reduction or discount on the price, not compensation for damages.

The basis for these remedies lies in the fact that the price set in a sale depends solely on the quality of the item purchased, so that the buyer must be able to examine it and make a decision based on that examination.

If this was based on a discrepancy between what he was able to observe—exercising due diligence on his part—and reality, there will be hidden vice, and therefore may either rescind the contract or request a price reduction commensurate with the actual condition of the item and its impact on the market price. It is therefore a mechanism designed to safeguard the economic balance of the sales contract, rather than a means of obtaining compensatory damages for a loss.

As we mentioned earlier, with the action quanti minoris resulting from the restructuring of hidden flaws The sales contract aims to restore the contractual balance by reducing the price in proportion to the defect; however, this is not a claim for damages arising from the damage, that is, an action to compensate for the harm they directly cause.

Differences Between a Price Reduction and Compensation

The Action quanti minoris cannot be intended to compensate for the damages caused by the hidden vice but rather to a reduction in price commensurate with the extent of the damage (more specifically, to a reduction in price that the damage (causes), not to the harmful consequences resulting from its occurrence, without prejudice to any other remedies to which the buyer may be entitled.