OGH: Right to refuse performance in case of defects in common areas

Mar 11, 2022 Benn-Ibler Rechtsanwälte

In the present case, the Austrian Supreme Court (Oberster Gerichtshof, OGH) dealt with the question of the extent to which a right to refuse the performance by two co-owners of a property affects common areas.

The defendants acquired condominium ownership of a flat and two underground parking spaces from the plaintiff, a property development company, in 2012. The defendant also issued an order to carry out certain special requests. At the time the action was brought, there were defects both in the defendant's acquired flat and in common areas of the property, the former having been remedied in the course of the proceedings.

The plaintiff demanded payment of the remaining amounts of the partial invoices and the amounts for the special requests; the construction defects had largely been remedied or were not attributable to the plaintiff, which meant that the defendants had no right of retention. The defendants countered that they were entitled to the defence of non-performance of the contract and the retention of the purchase price. Even without a majority decision, they were entitled to claim refusal of the performance with regard to the common areas.

Like the court of first instance, the court of appeal did not uphold the defendants' claim, but allowed an ordinary appeal. The OGH ruled:

A purchaser of work is entitled to a right to refuse the performance under Section 1052 of the Austrian Civil Code (Allgemeines Bürgerliches Gesetzbuch, ABGB) to secure his claim for the improvement of defective work. In principle, this right is not limited to the amount of the costs of repair and exists even if the defect is only minor, provided that the exercising of the right is not harassing. The OGH ruled that a condominium owner is entitled to substantive legitimacy even if the other condominium owners have not given their consent and also for those defects that do not only affect his own condominium property but also common areas. The assertion of the claim was also not harassing, as the OGH used the total costs of remediation to assess the right to refuse the performance.

2 Ob 34/21w (27.01.2022)