When selling a used property, most purchase agreements exclude liability for material defects – often summarized by the phrase “bought as seen.” However, this exclusion is not a free pass: if you deliberately conceal a defect you know about, you are still liable. We explain how far the exclusion of warranty extends, when you as the seller are nevertheless obligated, and which defects you must disclose.
What Does “Bought as Seen” Mean?
“Bought as seen” is the colloquial shorthand for an exclusion of warranty. The seller thereby declares that they do not wish to be liable for material defects in the property. In notarized purchase agreements, the more precise wording “to the exclusion of any liability for material defects” or “to the exclusion of the warranty for material defects” is usually used instead of the casually worded phrase.
The background lies in the statutory warranty law governing sales under the German Civil Code (BGB). Under Section 434 BGB, a material defect exists if the property does not have the agreed characteristics upon handover, is not suitable for its customary use, or does not have the usual characteristics that the buyer can expect. Since the sales law reform of January 1, 2022, these subjective and objective requirements have stood equally alongside one another – the actual condition is therefore measured more strongly against the usual standard.
Without a special agreement, a seller would have to be liable for such defects. When selling a used property, it is therefore customary and legally unproblematic to exclude liability for material defects in the contract. Hardly any private owner wants to remain liable for years after the sale for the condition of a possibly decades-old house.
How Far Does the Exclusion of Warranty Extend?
The exclusion transfers the risk of concealed material defects unknown to the seller to the buyer. If defects appear after the purchase that were to be expected in a property of this age and that you knew nothing about, the buyer generally cannot hold you liable.
However, the exclusion has clear limits:
- Known defects: If the buyer already knew of a defect when the contract was concluded, their rights are excluded in any event (Section 442 BGB). The exclusion does not change this.
- Legal Defects in the Land Register: Rights of third parties registered in the land register – such as land charges or rights of way – must be eliminated or disclosed, regardless of whether the buyer knew about them (§ 442 (2) BGB).
- Guaranteed characteristics: If you have expressly assured a specific quality or assumed a guarantee, the exclusion will not protect you.
- New construction and property developers: If a property developer sells a newly constructed property, the law governing contracts for work and services largely applies; a blanket exclusion is ineffective here. Exclusions for newly constructed buildings are also impermissible in pre-formulated contractual clauses (standard terms and conditions).
Important for classification: The strict protective rules governing the sale of consumer goods (§§ 474 et seq. BGB), which significantly restrict an exclusion, apply only to movable property – not to land and real estate. When selling an existing property to a private individual, the complete exclusion of liability for defects therefore remains effective.
Where you remain liable despite the exclusion: fraudulently concealed defects
The decisive exception is set out in § 444 BGB:
A seller may not rely on an agreement by which the buyer’s rights in respect of a defect are excluded or limited insofar as the seller fraudulently concealed the defect or assumed a guarantee for the quality of the item.
In plain terms: As soon as you fraudulently conceal a defect, the entire exclusion of liability for that defect is ineffective. You are then in the same position as if you had never agreed to an exclusion.
According to the settled case law of the Federal Court of Justice, fraudulent intent requires that you positively know of the defect – or at least consider it possible – and deliberately leave the buyer in the dark, although you know or anticipate that, if aware of it, they would not buy or would not buy on these terms. Conditional intent is sufficient; mere negligence or ignorance, on the other hand, is not. Typical disputes concern, for example, a known damp or mold-infested basement, previous water damage or dry rot infestation, an attic converted without a building permit, or painted-over, concealed previous damage.
Your disclosure obligations as the seller
Fraudulent intent arises not only through false statements, but also through silence – when a duty to provide information exists. This duty follows from the pre-contractual legal relationship (Section 311 (2) in conjunction with Section 241 (2) of the German Civil Code (BGB)).
As a rule of thumb: You must, on your own initiative, disclose circumstances that are clearly material to the purchase decision and that the buyer cannot identify themselves during a customary inspection. These typically include:
- concealed moisture, mold, or dry rot damage
- previous water damage or structural problems
- serious defects in the roof, pipes, or heating system
- Construction work without the required permit (“illegal construction”)
- contaminated sites, contaminated soil, or serious neighborhood conflicts
By contrast, you do not have to disclose obvious defects that are readily apparent during a normal inspection – such as visibly worn floors or a clearly old heating boiler. However, if you are asked a specific question, you must answer truthfully. Statements made “off the cuff” – that is, assertions without any basis, such as “the basement has never been damp,” even though you do not know this at all – can also give rise to an allegation of fraudulent concealment.
Our advice: It is best to record known defects and disclosed circumstances in writing in the purchase agreement or an annex. This creates clarity and later protects you against the allegation that you concealed something.
What rights does the buyer have in the event of a defect?
If the exclusion does not apply – for example, due to fraudulent concealment – the buyer is entitled to the statutory rights in the event of defects under Section 437 BGB:
- Subsequent performance, i.e., remedying the defect
- Withdrawal from the contract or reduction of the purchase price
- Damages or reimbursement of futile expenses
In the event of fraudulent misrepresentation, the buyer may additionally contest the purchase agreement within one year of discovering it (Section 123 BGB) and unwind the transaction.
The limitation period also plays a major role in your liability (Section 438 BGB). In the case of a building, claims for defects generally become time-barred five years after handover. However, if you fraudulently concealed a defect, the regular limitation period of three years applies (Section 195 BGB). Under Section 199 BGB, this period begins only at the end of the year in which the buyer discovers the defect – which can effectively extend your liability well beyond five years. An absolute maximum limit applies only after ten years.
FAQ on “bought as seen”
Does “bought as seen” exclude all liability?
No. The This clause only protects you from liability for defects that you did not know about and that were not guaranteed. You remain liable for fraudulently concealed defects and warranted characteristics.
What qualifies as a fraudulently concealed defect?
A defect is fraudulently concealed if you know about it or at least consider it possible, it requires disclosure, and you nevertheless deliberately conceal it from the buyer. A classic example is a known but painted-over moisture damage in the basement.
As a seller, do I really have to disclose all defects?
No, only material, concealed defects that the buyer cannot recognize during a customary inspection. You do not have to identify obvious defects separately. However, you must always answer specific questions truthfully.
Does the exclusion also apply when selling a new property?
For newly constructed properties – such as those sold by a property developer – a blanket exclusion of warranty is invalid. A full exclusion is typically only possible when selling used existing properties.
How long am I liable as a seller for defects?
For a property, the limitation period is generally five years from handover. For fraudulently concealed defects, the regular period of three years from the buyer’s knowledge applies – limited to a maximum of ten years.
Advantages and disadvantages of excluding warranty for sellers
Excluding warranty is standard when selling an existing property – but it does not apply without limits:
- Advantage – Predictability: You are not liable for defects you did not know about and that can be explained by the property’s age.
- Advantage – Legal certainty: Once the limitation periods have expired, you can regard the sale as concluded.
- Advantage – Common practice: Buyers expect such an exclusion when purchasing a used property; it does not make the sale more difficult.
- Disadvantage – No protection in cases of fraud: If you conceal a known defect, the exclusion is worthless – and you risk reversal of the sale and damages.
- Disadvantage – Questions of evidence: Whether you knew about a defect and were required to disclose it may later be disputed. Thorough documentation is therefore crucial.
Conclusion: Honesty is the best protection against liability
The “bought as seen” exclusion of warranty removes a great deal of risk for you as a seller – but only as long as you provide fair information. The best protection against later Demanding this is therefore not the most skilful clause, but rather providing complete and honest disclosure: Reveal known concealed defects, answer questions truthfully, and record the essential points in writing. This keeps the exclusion effective, and you complete the sale with peace of mind. If in doubt, it is worth seeking advice from the notarising notary or a specialist lawyer for purchase law.