After completion of a purchase transaction, the purchaser discovered that there exist illegal additions built in the apartment purchased, which were not disclosed by the sellers during the negotiation stage.
The Court held that the seller liable to compensate the purchaser because the law imposes an obligation on the seller to disclose to the purchaser the existence of any building irregularities in the property. Non-disclosure of material facts such as this is considered a misrepresentation and a breach of the obligation to act in an acceptable manner and with good faith. The seller is liable for any discrepancy in the property, whether the seller knew about it or should have known about its existence, and did not disclose it to the purchaser. However, there will be no liability where the purchaser in fact knew of the discrepancy. In this case, the sellers declared in the agreement that they “did not conduct illegal building deviations" even though in the past they made additions to the apartment without a legal permit. The purchaser’s declaration that they made “inquiries about construction irregularities and building rights and/or the planning status of the property" cannot exempt the sellers from liability for their contractual representations to the purchaser and is no reason to demand a purchaser to inquire about construction permits on its own. Such a demand may force the purchaser to a burdensome journey through the bureaucracy of the city or the government when the seller has first knowledge of the facts.