Hidden Defects in a Property: How to Rescind the Purchase Contract and Get Your Money Back

You are buying a property for millions and relying on the seller to tell you the truth about its condition. A case that went through all three instances of the Czech courts shows how serious hidden defects in a family house can be — and how important it is to know when and how to rescind the purchase contract. A married couple paid over CZK 5.5 million for land with a family house, only to discover that the property suffered from a whole series of serious hidden defects. The seller resisted repayment of the price up to the Supreme Court, which rejected her appeal.

What happened, and why the court found for the buyers

The claimants — two buyers — concluded a purchase contract for a family house with two sellers. After taking the property over, serious hidden defects gradually came to light, of which, on the courts' findings, the sellers must have known. The buyers had the property inspected by a specialist firm in October 2022 and then formally notified the defects. On that basis they rescinded the contract for material breach and claimed repayment of the purchase price of CZK 5,559,065 with accessories.

The District Court in Kutná Hora granted the claim. The Regional Court in Prague, on appeal, essentially upheld that verdict. The seller then turned to the Supreme Court with an appeal on points of law raising several objections.

First, she argued that the appellate court had breached her right to a fair trial by changing the hearing date without notifying her and refusing an adjournment. The Supreme Court held that this was an objection of procedural defect, which it considers only where the appeal is admissible on some other ground — which it was not.

Second, she claimed that the buyers had notified the defects too late, arguing that they must have been aware of some of them before the expert inspection and yet gave notice only three months afterwards. The Supreme Court held that this failed to establish admissibility, because the appellant relied on a single decision and overlooked the appellate court's key finding: not only were the defects notified without undue delay, but the seller has no right to raise that objection at all under the second sentence of Section 2129(2) of the Civil Code. That provision protects buyers where the seller knew or must have known of the defects — in which case the seller cannot rely on late notification.

Third, the seller challenged the refusal to order a review expert opinion, arguing that the opinion the courts relied on was contestable. The Supreme Court recalled that the assessment of evidence is the exclusive province of the trial courts and rests on the principle of free evaluation of evidence. Disagreement with findings of fact is not a ground of appeal to it.

Fourth, the appellant treated as unresolved the question whether a court may grant a claim for repayment of the purchase price where the claim does not simultaneously offer to return the property. The Supreme Court answered plainly: the question is already settled by judgment No. 23 Cdo 2042/2020, published in the Collection of Court Decisions under No. 98/2022. It follows that a buyer claiming repayment of the price need not simultaneously offer to return the object of the sale — the restitutionary duties of the two parties exist independently of one another.

Fifth, the seller disputed the meaning of “material breach of contract”, but again cited a single decision and built her argument on her own version of the facts rather than on the courts' findings. That approach is unacceptable before the Supreme Court.

Practical lessons for buyers and sellers

• A seller who knows of defects and conceals them cannot rely on late notification. Section 2129(2) of the Civil Code is uncompromising here. Where the seller knew or must have known of hidden defects, the buyer's position is strong even if the defects were not notified immediately.
• Rescission for material breach is an effective remedy. Where the defects are so serious that the buyer would never have entered into the contract had they known of them, that is a material breach entitling the buyer to rescind.
• A claim for repayment of the price need not offer the property back at the same time. That is an important procedural point: the buyer need not fear that the claim will be dismissed merely because it lacks an express proposal to transfer the property back.
• A thorough technical survey before purchase is irreplaceable. And where defects emerge only after the purchase, it is essential to have the property assessed by a specialist firm and to notify the defects in writing without undue delay.

From the seller's point of view the message is plainer still: concealing known defects does not pay. Not only do you risk repaying the entire purchase price; you also lose the ability to object that the buyer gave notice too late. Transparency in selling a property is thus not only the ethical course but the legally safest one.

The Supreme Court's decision confirms the stability of Czech case-law on liability for hidden defects in property and gives buyers a clear signal: where the seller knew of the defects and concealed them, the law is on your side.

Source: Supreme Court, 33 Cdo 2487/2025; Regional Court in Prague, 27 Co 63/2025-394; District Court in Kutná Hora, 5 C 119/2023.