Buyer Beware

Buyers will no doubt be aware of the legal principle caveat emptor which translates as ‘let the buyer beware’. This means in law that there is a basic premise that the onus falls upon the buyer to investigate the property before completing the purchase. This is why conveyancers encourage buyers to carry out sufficient searches and building surveys (and why some mortgage lenders insist upon a high level of investigation at the outset, before the parties are contractually bound to one another).

Buyers are encouraged to raise enquiries during the course of a property transaction, before exchanging contracts, to limit risk by ensuring the seller discloses all relevant information about the property being transferred.

Unfortunately, problems still come to light after the legal papers have been signed.

There are steps a buyer can take when a property defect is discovered after contracts have been exchanged, this is particularly true if you can demonstrate that a seller knew or ought to have known about such defect but failed to disclose it. A buyer’s remedy will depend on a number of factors including the type of defect, when it was discovered and the nature of the seller’s non-disclosure.

If a defect is discovered between exchange and completion i.e. after contracts have been entered into, a buyer may refuse to complete, renegotiate the price or claim damages from the seller. Buyers should notify their conveyancing solicitors of any problems immediately upon discovery.

The position is not so straightforward if a defect is discovered after completion, i.e. once purchase monies have been paid over and the buyer has already taken ownership of the property. In these circumstances a buyer might be able to rescind the contract and demand to be put back in the pre-contractual position, or the buyer might be entitled to claim damages from the seller for the latter’s breach of contract and/or misrepresentation.

In legal terms there are essentially three types of misrepresentation; fraudulent, negligent and innocent:

• Fraudulent misrepresentation is where a false representation is made knowingly or recklessly. For example, where a seller states on the ‘Property Information Form’ that there are no disputes but is in fact embroiled in a neighbour dispute.
• Negligent misrepresentation is where a statement is made by one party to another carelessly or without reasonable grounds for believing its truth.
• Innocent misrepresentation is where a statement is made entirely without fault and the maker of the statement can prove reasonable grounds for believing the statement was true.

If you have bought a property and have identified a defect for you feel should have been disclosed to you before you bought, contact the property litigation team at Fosters Solicitors to see how we can help.

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