Warranty or damages for construction defects: the two routes compared

The warranty under sections 922 to 933 ABGB attaches solely to the fact that the work is defective. It is independent of fault: you do not have to prove any misconduct on the part of the contractor. It is enough that the building does not have the agreed or the ordinarily required quality and that the defect was already present in essence at handover.

The aim of the warranty is the contractual condition. The contractor is to deliver what it undertook to provide. The warranty therefore relates to the work itself and not to losses going beyond it. What the warranty achieves is the provision of what you actually ordered.

The ABGB arranges the remedies in tiers. Repair or replacement, that is to say the remedying of the defect, come first. Only where this is impossible, disproportionate, refused or has failed do the secondary remedies of price reduction or rescission come into consideration. As a rule you must observe this order under section 932 ABGB.

The damages claim under section 933a ABGB applies where the warranty reaches its limit. It exists alongside the warranty and requires fault on the part of the contractor, that is to say at least slight negligence. In return it reaches further: it covers not only the defect itself but also the damage that a defect causes to other protected interests.

Such consequential losses are common in practice. A leaking roof soaks the furniture beneath it, a faulty pipe causes water damage to floors and walls, defective sealing damages the fittings in the cellar. These losses are not the defective work itself but its consequence. They could not be compensated through the warranty alone.

Within the warranty period an easing of proof works in your favour for the damages claim: a presumption of fault applies in your favour. The contractor must then prove that it is not at fault. After the warranty period expires, you again bear the burden of proving fault yourself.

The warranty for a building becomes time-barred under section 933 ABGB three years from handover. Within this period you must assert your warranty claims in court where the contractor does not repair voluntarily. What matters is the time of handover, not the time at which a defect becomes visible.

The damages claim follows its own rules. Under section 1489 ABGB it becomes time-barred three years from knowledge of the loss and the wrongdoer, but only after thirty years in absolute terms. This matters precisely with long-hidden defects: where the warranty period has already expired, a damages claim may in some circumstances still exist.

For the first six months from handover the presumption under section 924 ABGB also assists you. If a defect appears in this period, it is presumed to have been present at handover. This reversal of the burden of proof concerns the existence of the defect and relieves you regardless of which of the two routes you pursue.

In practice warranty and damages often arise together. The contractor has built the roof defectively: through the warranty you demand repair of the roof, through the damages claim compensation for the soaked furniture. Both claims exist alongside one another and do not exclude each other.

For the defect itself, too, the damages claim opens up additional possibilities. Where the contractor has worked defectively through fault, you may in some circumstances have the defect remedied and claim the cost as damages, without having to observe the tiered order of the warranty strictly. A precise legal examination matters here, because the requirements are demanding in detail.

How to give notice of defects in good time is explored in our article on the rights after handover. Where a dispute arises over the cause, an expert opinion is often decisive. An overview is provided on our focus page on construction damages and liability.