Partner Philippa Rudd explains just how much you have to disclose when you put your house on the market…
There was a welcome shift in the law relating to estate agents and how they treat property buyers last year, when changes were introduced to the Consumer Protection from Unfair Trading Regulations 2008. These amendments to the regulations replaced The Property Misdescriptions Act 1991 (which made it an offence for estate agents to give any false or misleading information) and they have had a direct impact on how estate agents conduct their business. In a nutshell, agents now have to be seen to act equally for both seller and buyer.
The basic position is as follows:
- The agent has to consider what information should be made available to the buyer
- The agent has to check this for accuracy and relevance. The agent has to take reasonable steps, if necessary, to make additional enquiries
- The agent has to provide all relevant information to a prospective buyer to help them make the decision whether or not to buy a house. The agent has to consider whether the buyer is an ‘average consumer’. If the agent considers the buyer to be particularly vulnerable (such as a first time buyer) then he will have to take extra steps to help them further
- The agent has to flag up any publically available information (for example a proposed new road, possible flooding or high crime levels) to prospective buyers
Clients selling a house often ask us what has to be disclosed to potential buyers. Sellers have to fill in a detailed Property Information Form (which is more probing than before) and we have to reply to enquiries raised by the buyer’s solicitor on the title deeds, survey and search results
The rule “caveat emptor” (‘let the buyer beware’) still applies when you are selling a property, so it is up to the buyer to make his own investigations and to have a survey. However, sellers are under a duty to disclose any defects in the title deeds and any latent (hidden) encumbrances (adverse matters) to potential buyers. The latter have been held to include a right of way that, although apparent on inspection, was held to be a latent defect that should have been disclosed to the buyer. Sellers should also disclose any boundary adjustments or disputes with the neighbours. And sellers should consider disclosing rights affecting their property, for example any services that run through the property, any short cuts over their land or car parking rights enjoyed by the neighbours. Critically, sellers shouldn’t assume that a buyer is aware of such matters, but should make a disclosure. Sellers have to disclose any occupants (ie boyfriend, grandparent), who should also sign the contract.
Sellers must disclose any official letters that have been received. And it is advisable to disclose any planning matters relating to the house or the neighbourhood.
While sellers don’t have to disclose physical defects, a buyer may be able to claim damages under the ‘tort of deceit’ if the seller has deliberately concealed a known physical defect.
And a final word of warning. If a seller fails to disclose a problem that should have been disclosed, their buyer may be able to rescind (cancel) the contract and claim back his deposit - or he may have a remedy for damages…
If you are thinking of selling your property, I would strongly advise you to speak to your solicitor who will be able to advise on what issues should be disclosed.