Hidden defects in a new home: what they are and who is liable
The buyer of a new-build property is protected against visible defects by the move-in inspection and the annual inspection. But what about faults that lie concealed within the structures — out of sight — and only surface years later? These are known as hidden defects (latent defects), and the builder’s liability for them can run for as long as 10 years from the transfer of administration.
Hidden defect is a concept worth understanding correctly: it does not mean every fault discovered later, but only those that could not have been found in a normal inspection. This distinction is what decides whether the builder is liable or not.
What is a hidden defect?
Under the Housing Transactions Act (843/1994), a defect is a hidden defect when it meets all of the following conditions:
- The fault was not detectable in the move-in inspection, the annual inspection or any other normal inspection without opening up the structure or carrying out specialist measurements.
- The fault has existed since the construction phase — it does not result from normal wear and tear, inadequate maintenance or the occupants’ own actions.
- The fault deviates from what can reasonably be expected — for example from the plans, the building regulations or good construction practice.
Typical hidden defects in a new-build property
| Category | Example of a hidden defect |
|---|---|
| Waterproofing | Waterproofing is missing or too thin in a wet room — the damage only shows up as a damp patch or an odour |
| Sound insulation | A missing acoustic sealant in a partition wall — sound carries even though the wall looks intact |
| Fire safety | A missing fire stop at a service penetration — only revealed during later renovation work |
| Structures | Insulation thickness is too small — energy loss and cold bridges are exposed in a proper thermal-imaging survey |
| Pipes and drains | An installation error or the wrong material in the pipework — a leak or blockage only appears in use |
When is the builder liable for a hidden defect?
The warranty period (roughly 2 years from completion): the burden of proof is on the builder
During the warranty period (usually two years from completion or from handover of the dwelling to the buyer), the burden of proof rests, as a starting point, with the builder: it must show that the fault stems from some cause other than a construction defect. This applies to all defects — hidden defects included. The warranty period is the most favourable window from the shareholders’ point of view.
Note that the 10-year liability is calculated separately from the transfer of administration, which may take place months after completion. The two periods therefore do not necessarily begin at the same moment.
The ten-year liability: the burden of proof shifts to the housing company
After the warranty period comes the ten-year liability, which runs for 10 years from the transfer of administration. During this time the builder remains liable — but only for hidden defects, and now the burden of proof lies with the housing company. The housing company must be able to demonstrate:
- that the fault is real and significant in construction-engineering terms,
- that it could not have been detected in a normal inspection,
- and that it stems from the builder’s error or omission — not from normal wear and tear or a lack of maintenance.
A fuller account of the difference between the warranty period and the ten-year liability can be found here: Warranty period and ten-year liability: the builder’s liability in a new-build property.
The burden of proof in practice: what you need
Proving a hidden defect during the ten-year liability period generally requires the following:
An expert’s opinion
Observations by the residents alone are not enough. You need a written opinion from a building-health expert or an experienced building consultant, stating:
- the nature and location of the defect
- that the fault is a construction-engineering one, not the result of normal wear and tear
- and, where possible, what went wrong during the construction phase
A comparison of structural types and plans
The structural-type drawings included in the safety documents (the VS, VP, AP and US drawings) are invaluable at this stage. They show what was designed — and a moisture survey or an exploratory opening of the structure shows what was actually built. A discrepancy between the two is evidence of a construction defect.
For a checklist of which documents you must obtain: Safety documents: what the housing company must receive from the builder.
Documentation of the moment of discovery
Record the date and the circumstances in which the hidden defect came to light: who discovered it, what was happening at the time, what the first signs were. This matters for showing that the claim was made within a reasonable time of discovering the defect, as the law requires.
Complain immediately when a hidden defect comes to light
This is the single most important piece of advice: complain at once. A hidden defect cannot be reported “at a convenient moment” or a few months down the line. The Housing Transactions Act requires notification within a reasonable time of discovering the defect — and in case law a reasonable time is typically a few months, not years.
The claim must be in writing, identify the defect as precisely as possible and include a demand for repair. Guidance on making a claim: Making a written claim to the builder: how to do it correctly and on time.
If the builder disputes liability, the matter can be taken to the Consumer Disputes Board (KRIL), the free, first-line route to resolving a dispute before going to court. KRIL issues recommendations for a decision — these are not binding, but a failure to comply is made public and can cause the builder reputational harm. Bear in mind that an individual shareholder can act as a consumer before KRIL, whereas the housing company itself is not a consumer and must use the District Court. Referral to KRIL may interrupt the limitation period — confirm this with consumer advice or a lawyer in good time.
Remember too: the claim must be made within a reasonable time of discovering the defect. The claim for compensation or repair (the debt) that follows generally becomes time-barred after about three years under the Act on the Limitation of Debts (728/2003), unless the claim is renewed or court proceedings are started. Limitation periods and how they are calculated are case-specific — verify the deadline that applies to your situation with a lawyer.
Order a professional inspection before the 10 years are up
We recommend ordering an impartial 10-year inspection roughly two years before the liability period ends — that is, about 8 years from the transfer of administration. An experienced construction-engineering expert will find hidden damage that the board or the residents may not recognise. After the inspection it is also important to work out who pays the cost of repairing a construction defect — the allocation of liability is not always clear-cut.
Every finding must be complained about immediately. Once the 10-year limit has passed, the builder’s liability for hidden defects under the Housing Transactions Act comes to an end — which is why inspections and claims must be made in good time. In exceptional situations (for example deliberate concealment) the legal position may be different — in such a case, confirm matters with a lawyer.
Keep the chain of evidence safe
A hidden-defect claim can be a long process. All the documents — defect reports, photographs, expert opinions, correspondence with the builder and repair records — must be retained throughout the full ten-year liability period.
VAREK helps you store every defect report, claim and related document in one place, and track the liability periods. Legal deadlines must always be verified case by case.
Contact us — and make sure your housing company is ready if a hidden defect comes to light.
This is a general guidance article, not legal advice. The legal questions surrounding the assessment of hidden defects and the making of claims depend on the specifics of each case — verify them with a lawyer or a qualified building expert as necessary.
Frequently asked questions
What is a hidden defect in a home?
A hidden (latent) defect is a construction defect that could not have been detected in a normal move-in or annual inspection without opening up the structure or carrying out specialist measurements. The defect must have existed since the construction phase and must deviate from what can reasonably be expected. The mere fact that a fault surfaces later does not make it a hidden defect.
How long is the builder liable for a hidden defect?
Under the Housing Transactions Act, the builder is liable for hidden defects for 10 years from the transfer of administration. During the warranty period (roughly 2 years from completion) the burden of proof lies with the builder, but during the ten-year liability period the housing company must itself demonstrate that the issue is a hidden defect rather than normal wear and tear.
What should I do when a hidden defect comes to light?
Complain immediately and in writing — any delay can cost you the right to claim. Record the date and the circumstances in which the defect emerged, obtain a written opinion from an expert on the nature of the defect, and make sure the claim is specific and includes a demand for repair. The exact content of the claim and the applicable deadlines are best verified with a lawyer.
What evidence is needed for a hidden-defect claim?
During the ten-year liability period the housing company must show that the defect is real, that it could not have been detected in a normal inspection, and that it stems from the builder's error. In practice this requires a written opinion from a building-health expert or a building consultant, together with a comparison of the as-built work against the structural-type drawings in the safety documents. Documentation of when the defect was discovered is also important.