1. INTRODUCTION
    The sale and purchase of property is a fundamental legal relationship in society. The significance of this transaction lies in protecting the rights of consumers and sellers, as well as ensuring legal certainty provided by the state. Every transaction carries risks, including the possibility of hidden defects in the (real) property being sold. Hidden defects can cause losses to the buyer and lead to legal disputes. Hidden defects refer to conditions that are not apparent to the buyer at the time of the transaction but can cause financial harm after the sale is completed.

    In the Indonesian Civil Code (ICC), hidden defects are regulated under Articles 1504 to 1509. These articles address the seller’s liability for defects in the goods sold and outline the seller’s obligations to compensate the buyer for losses caused by such defects. The code also grants the buyer the right to seek compensation or cancel the sale if a hidden defect is discovered. This legal framework underscores the protection provided to the buyer in cases of unforeseen conditions that could result in harm.

    Understanding hidden defects in property transaction is essential not only from a legal perspective but also for its practical implications on the parties involved. This article aims to delve deeper into legal cases concerning hidden defects in property transactions and analyze how provisions in the ICC can be applied to determine the seller’s liability and the buyer’s rights.

  2. DISCUSSION
    1. The Legal Basis for Hidden Defects in Property Sales
      A hidden defect refers to a condition where an item has damage or reduction of its function that is not immediately visible but requires closer inspection to detect. This type of defect cannot be identified through casual observation but only through more detailed analysis. In other words, the item may appear normal at first glance, but it harbors underlying damage or deficiencies that are only discovered with thorough examination.1

      Specifically, Article 1491 of the ICC states that the seller is obligated to guarantee two things to the buyer:2

      1. safe and secure possession of the goods sold (free from interference by third parties); and
      2. the absence of hidden defects in the goods, or any defects significant enough to justify the cancellation of the purchase.

      From that article, it can be concluded that the seller has two main obligations, namely to deliver and guarantee the goods free from hidden defects. The obligation to cover hidden defects means that the seller must be responsible for defects that render the goods unusable for their intended purpose or reduce their functionality. If the buyer knew of the defects, they might not have purchased the goods or would have done so at a lower price.3

      Further examination of Article 1506 of the ICC shows that the seller is responsible for hidden defects, regardless of whether they have been aware of such defects. However, an exception applies if there is an agreement between both parties stating that the developer will not be liable for any defects. This indicates that hidden defects are the seller’s responsibility to the buyer unless there is an agreement to waive that responsibility.

      If defects are found in the purchased goods, the buyer has several options as outlined in Article 1507 of the ICC, including:4

      1. return the goods while demanding a refund of the purchase price; or
      2. retain the goods while seeking a partial refund of the purchase price as determined by the judge after hearing experts on the matter.

      Then, the seller’s obligation would be:

      1. If the seller was actually aware of any defects in the purchased goods, they are obligated to refund the purchase price received and compensate for all losses, including any associated costs and interest incurred.5
      2. If the seller was unaware of any defects in the purchased goods, they are still obligated to refund the purchase price and cover the costs incurred by the buyer for the purchase and delivery of the goods, provided that these costs have already been paid by the buyer.6

      The Consumer Protection Law No. 8 of 1999 also addresses regarding hidden defects. Article 9, paragraph (1), letter f states that business actors are prohibited from offering, promoting, or advertising goods and/or services in a misleading manner, especially suggesting that such goods do not contain hidden defects.7 Additionally, Article 1, letter b indicates that business actors involved in sales through methods like auctions or sales events are forbidden from deceiving consumers by presenting goods and/or services as if they do not have hidden defects.8

    2. Jurisprudence Analysis of Supreme Court Decision No. 2186 K/Pdt/1999
      On May 27, 1993, a property sale agreement was made between an individual as the buyer (Plaintiff) and a company as the seller (Defendant).9 After living in the house for three years, the plaintiff received an order from the Riau Provincial Government (SK No. 591/Air/08.97) to demolish the house, citing that it was built in a green zone along the river. Feeling aggrieved, she filed a lawsuit against the Defendant in the Pekanbaru District Court, claiming there was a hidden defect in the sale agreement.

      Supreme Court Decision No. 2186 K/Pdt/1999 at the cassation level which has been legally binding provides significant legal considerations regarding the seller’s responsibility in property sales, particularly concerning hidden defects. In this case, the Defendant, as the developer, rules as have committed unlawful acts against the Plaintiff by selling land with a house on it, which was not permitted for construction due to its location in a designated green zone. The judges emphasized several important points in their considerations:

      1. Seller’s Responsibility
        The judges emphasized that developers are responsible for delivering properties free from hidden defects, as outlined in Article 1504 of the ICC. They must ensure that the property complies with regulations, matches its description, and is suitable for the buyer’s use. In this case, the Defendant was deemed as negligent for failing to provide adequate information regarding the legal status of the property.
      2. Hidden Defects
        The decision identifies that a hidden defect is a condition that can reduce the value or function of an object or property, such that if the buyer was aware of the defect, they may have not proceeded with the transaction or may have asked for a lower price. The Judges considered that defects discovered by the buyer after the transaction has taken place are the responsibility of the developer as the seller.
      3. Compensation
        In the decision, the Defendant was ordered to pay compensation to the Plaintiff. As the buyer, the Plaintiff was entitled to receive compensation for all damages caused by the hidden defects. Additionally, the plaintiff was required to return the house in an empty state, and the Sale and Purchase Deed as well as the Building Use Rights Certificate for the land were declared void.
    3. Other Cases of Hidden Defects
      1. Decision Number 1345 K/Pdt/2018
        This case is a dispute over a land sale and purchase transaction between an individual as the buyer (Plaintiff) and an individidual as the seller (Defendant).10 The dispute involved an initial agreement for the purchase of land and a house that the defendant was supposed to build in Diro, Bantul, Yogyakarta. However, the construction did not occur, leading the defendant to propose an alternative: selling an existing property in Pilahan Kotagede, Yogyakarta, which she claimed was owned by the seller. Both parties decided to formalize the House Sale and Purchase Agreement at the Notary/PPAT (Land Deed Official) in Yogyakarta. The Defendant brought a photocopy of the certificate of the object of the sale and purchase between the Plaintiff and the Defendant and it was found that the photocopy of the certificate is registered under the name of the other person (not the seller), so that a deed of sale and purchase agreement on the land could not be made.

        Based on the judge’s consideration, the defendant engaged in an unlawful act by selling a property with hidden defects without providing clear information to the plaintiff. Consequently, the court ordered the Defendant to return the payment of IDR 440,000,000 (four hundred forty million rupiah) received from the plaintiff, along with renovation costs amounting IDR 15,000,000 (fifteen million rupiah).

      2. Decision Number 77/PDT/2018/PT.DKI
        The case involves a sale of an Audi car between a limited liability company (the Plaintiff) and another limited liability company (the Defendant).11 The Plaintiff purchased an Audi car, then discovered a hidden defect in the air conditioner that was not working. This defect was unknown at the time of purchase and became the source of legal problems. At the time of the transaction, the Defendant did not provide information about the defect, so the Plaintiff did not realize that the car purchased had a problem with the air conditioning. When the Plaintiff became aware of the damage, the Defendant did not show good faith to take responsibility. With this, then referring to Article 1508 of the ICC, the Defendant is obliged to refund the purchase price he has received, he is also obliged to compensate all costs, losses and interest.
    4. Implications of the Decision for Property Sale and Purchase Practices in Indonesia
      1. Assertion of Seller’s Liability
        Various jurisprudences emphasize that the seller, is responsible for delivering goods free from hidden defects. The seller must provide accurate information about the condition of the property they intend to sell. If there are hidden defects, the developer cannot evade responsibility, even if they were unaware of such defects at the time of the transaction, unless agreed otherwise.
      2. Legal Certainty for the Buyer
        The existence of such jurisprudence provides legal certainty for buyers regarding their rights to seek compensation if they discover hidden defects after a transaction. This strengthens the position of consumers in property sales, offering them better legal protection.
      3. Impact on Business Practices
        Encouraging developers and property sellers to be more transparent in providing information about the condition of the properties they sell is crucial. With clear legal risks associated with hidden defects, businesses are expected to exercise greater caution and responsibility in property transactions.
  3. CONCLUSION
    In the context of property transactions, hidden defects represent a significant legal issue that influences the relationship between developers and buyers. Through the analysis of jurisprudence and legal studies in the Civil Code, it can be concluded that developers have a clear responsibility to deliver goods free from hidden defects. Developers are obligated not only to provide accurate information about the property’s condition but also to be accountable for losses incurred by buyers due to defects that were not detected at the time of the transaction.

    The existing jurisprudence, such as Supreme Court Decision No. 2186 K/Pdt/1999, illustrates that courts tend to protect buyers or consumers rights by affirming the developer’s responsibility concerning hidden defects. This establishes an important precedent for consumer protection and promotes more transparent business practices in the property sector. Such legal interpretations encourage developers to disclose any potential issues with properties, thereby fostering trust and accountability in real estate transactions.

    It is essential for both developer and buyers to understand their rights and obligations in property transactions. The seller must be more diligent in providing information and ensuring that the properties sold are in good condition, while buyers should conduct thorough inspections before completing the transaction. By fostering a better understanding of hidden defects and their legal implications, it is hoped that the sale and purchase arrangement can proceed fairly and sustainably, providing maximum protection for all parties involved.

References:

  • Indonesian Civil Code
  • Law No. 1 Year 2011 on Housing and Settlement Areas
  • Decision Number 390/Pdt/2021/PT BDG
  • Jurisprudence of Supreme Court Decision No. 2186 K/PDT/1999
  • Decision Number 1345 K/Pdt/2018
  • Decision Number 77/PDT/2018/PT.DKI
  • Harum Tri Nugraheni. 2024. Perlindungan Hukum Bagi Pihak Pembeli Akibat Cacat Tersembunyi Pada Transaksi E-Commerce Melalui Marketplace Shopee. Aliansi: Jurnal Hukum, Pendidikan dan Sosial Humaniora Volume. 1.
  • Subekti. 1992. Aneka Perjanjian. Cetakan ke-9. Bandung: Citra Aditya Bakti.
  • Chandra Dewi Puspitasari. 2007. Tanggung Jawab Developer untuk Menanggung Cacat Tersembunyi dalam Perjanjian Jual Beli Rumah Perumahan. Jurnal Penelitian Humaniora, Vol. 12, No. 2: 1-14.
Salza Farikah Aquina

Sources

  1. R. Subekti. 1992. Aneka Perjanjian. Cetakan ke-9. Bandung: Citra Aditya Bakti. p. 19.
  2. Article 1491 of Indonesian Civil Code (ICC)
  3. Article 1504 of ICC
  4. Article 1507 of ICC
  5. Article 1508 of ICC
  6. Article 1509 of ICC
  7. Article 9 Law Number 8 of 1999 on Consumer Protection
  8. Article 11 of Consumer Protection Law
  9. Jurisprudence of Supreme Court Decision No. 2186 K/PDT/1999
  10. Decision Number 1345 K/Pdt/2018
  11. Decision Number 77/PDT/2018/PT.DKI
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