Judicial principles and studies
Claim for Compensation for Hidden Defects and Loss of Value in an Apartment Sale
A brief summary of a dispute over compensation for a hidden defect in an apartment delivered without contractual reservations, and the application of rescission or diminution remedies when preventing increases exist.
Updated: 10 September 2026
Prepared and reviewed by: Ashraf Al-Khawaja
Subject
The study concerns a claim for compensation due to a hidden defect in an apartment delivered by the seller to the buyer without any contractual reservations, leaving the buyer with the option to rescind the sale or accept it and claim a reduction in price under Article 513/1 of the Civil Code. The points address Article 518, which provides that if there is a preventing increase the buyer's remedy is a reduction for the defect rather than rescission. Examples of such increases include alterations connected to the property or a mortgage placed on the apartment before discovery of the defect. The facts note additions made to the apartment before and after discovery (e.g., kitchen installation) and the mortgage taken to finance the purchase.
Summary
The claim is essentially for compensation for a hidden defect and does not require a prior notice under Article 362 of the Civil Code for this remedial nature. When preventing increases are established, the buyer's right to rescind is displaced and the remedy becomes diminution of the price pursuant to Article 518. The appellate court reopened the proceedings to examine the preventing increases and ordered production of documents and personal testimony in line with procedural provisions (Article 158/3 and Article 100 of the Civil Procedure Code) to ascertain the factual situation.
Practical significance
- Where an apartment is sold without reservations and a pre-existing defect appears before delivery, the buyer may rescind or accept and seek a price reduction, unless preventing increases exist. - Permanent additions or a mortgage that preclude returning the property convert the remedy to diminution of value rather than rescission. - Courts may reopen proceedings and compel production of documents to determine whether preventing increases exist. This is an educational summary based on the official points provided; it is not judicial text nor legal advice.
Sources and references
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