LITTLE WHITE LIES - THEY COST MORE THAN YOU THINK!

In almost every property transaction a seller (or landlord) is required to provide replies to standard pre-contractual enquiries. In residential transactions these will usually be in a Property Information Form and in commercial transactions they will be by way of CPSE’s.  It is important that these are answered correctly and updated if anything changes before sale as otherwise the buyer may have a claim for misrepresentation.

Misrepresentation is a false statement of fact made by one party to another party, which has the effect of inducing that party into the contract.

The recent case of Quilter v Hodson Developments Ltd [2016] is a warning to all those providing these replies to enquiries. In this case the developers, Hodson Developments Ltd sold an apartment in a development to Mrs Quilter for £240,000.  In their replies to enquiries Hodson had stated that they were not aware of any disputes in relation to the property. It later turned out that there had been disputes over the communal central heating and hot water system which serviced the development. In Court the Judge found that there had been misrepresentation and awarded Mrs Quilter damages of £15,000 – being the difference between the price paid for the apartment and the value having regard to the heating and water issues.

The case serves as a caution that omissions and failure to update a buyer or tenant on any issues raised, even after exchange of contract can result in serious and expensive consequences.

For more information contact our Commercial Dept.