Evicted buyer can sue only its own seller on warranty

The Court of Appeal, composed of Chief Justice Mark Chetcuti, Mr Justice Christian Falzon Scerri and Madam Justice Josette Demicoli, ruled on 26 March 2026 that a buyer who loses property to a third party can invoke the warranty of peaceful possession only against its own seller. An earlier seller in the chain answers only to its own buyer. The court allowed the original sellers' appeal in Hola Properties Limited vs C.P. and sent part of the case back to the First Hall of the Civil Court.

The facts

In 2009 Hola Properties Limited bought two rights over the same property from Marlex Limited, a company in the same group. The first was a temporary sub-emphyteusis, a grant of land for a fixed term against ground rent. The second was the temporary direct dominium with eventual full ownership.

Marlex Limited had bought both rights in 1995 from a married couple, who had bought the direct dominium in 1994 from a family of sellers. Hola Properties Limited later lost both rights. In 2016 the Court of Appeal found that the sub-emphyteusis ran for 21 years, renewable by public deed, and had not been renewed. In 2019 the First Hall found that the direct dominium belonged to third parties.

Hola Properties Limited and Marlex Limited, through its liquidator, sued the couple's heirs and the original sellers. On 29 November 2024 the First Hall held that the last buyer could sue the original sellers directly, relying on article 998 of the Civil Code (Chapter 16 of the Laws of Malta).

What the court held

The court disagreed with both the First Hall and the buyers. It held that, under four of its own judgments over the previous five years, an action on the warranty of peaceful possession lies only between the parties to the contract that created it.

In the court's words: "Il-garanzija tal-paċifiku pussess, għalhekk, ma tistax tiġi mġebbda għal terzi li ma jkunux parti fil-kuntratt." (The warranty of peaceful possession, therefore, cannot be stretched to third parties who are not party to the contract.)

The court recognised three exceptions. The buyer's heirs continue the buyer's person. The seller may state in the contract that the warranty also covers the buyer's successors. The buyer may expressly assign the right under the warranty to someone else.

The court rejected the First Hall's reading of article 998. That article, it held, covers the person who promised, that person's heirs and those who step into that person's shoes. Neither plaintiff fell into that category.

The court accepted that Maltese sale law is silent on whether the warranty passes to later buyers. It held that its own judgments had filled that silence, and that the First Hall should not have turned to Italian and French writers. Malta has no rule of binding precedent, but the court held that like questions should receive like answers, and that changing the law is a task for the legislature.

Applied to the case, Hola Properties Limited had no action against either group of defendants. The court held: "Hola Properties Limited kellha tinvoka dan il-jedd tagħha kontra Marlex Limited, bħala l-bejjiegħa immedjata tagħha u mhux kontra l-konvenuti." (Hola Properties Limited had to invoke this right against Marlex Limited, as its immediate seller, and not against the defendants.) Marlex Limited could sue only the couple's heirs.

The court also found that the First Hall had wrongly dismissed Marlex Limited's claims over the sub-emphyteusis because a proper title search would have shown the 21-year term. The warranty against eviction, unlike the warranty against latent defects, does not exclude defects the buyer could have known. Under article 1410 only a special agreement reduces the warranty, and the couple had warranted the full 42 years. The court sent those claims back to the First Hall.

Why it matters

A buyer facing eviction should sue its immediate seller, who can then turn to its own seller. A buyer who wants the benefit of an earlier seller's warranty needs an express clause extending it to successors or an express assignment.

A seller cannot escape the warranty by showing that the buyer could have discovered the defect. Only a special agreement under article 1410 limits it.

Where it sits

The warranty against eviction, from article 1409 of the Civil Code, protects the buyer's peaceful possession of the thing sold. Article 998 presumes that a person contracts for himself, his heirs and those claiming through him. The case decides how far that presumption carries a warranty down a chain of sales, and the court answered: not past the immediate seller.

The court followed its own line in judgments of the Court of Appeal of 17 March 2021, 31 May 2023, 12 March 2024 and 18 June 2024. On consistency in case law it cited the Court of Appeal (31 October 2014, 12 July 2023 and 12 October 2023). On the role of the legislature it cited Mercury plc vs Persona Limited (Court of Appeal, 29 February 2024).

On whether the First Hall had raised a plea of its own motion, the court applied article 732A of the Code of Organization and Civil Procedure (Chapter 12 of the Laws of Malta) and cited the Court of Appeal (15 October 2024). It held that the First Hall had raised no such plea, and cited St George's Park Co. Ltd vs Generali Italia S.p.A. (Court of Appeal, 2 February 2026). On good faith under article 2140 it cited the Court of Appeal (23 May 2024).

Source

Court of Appeal (Superior Jurisdiction), 919/2020/1, 26 March 2026.